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Former Conservative minister Brooks Newmark has been cleared of failing to register as a lobbyist for an overseas medical equipment company during the pandemic because of a loophole in UK law for foreign lobbying.
The lobbying regulator this week found that Newmark did not have to disclose work by his consultancy, Brooks Newmark & Co Ltd, for Worldlink Resources, a Hong Kong-based supplier of personal protective equipment.
In May 2020, soon after the start of the Covid-19 pandemic, Newmark sent multiple emails to then health secretary Matt Hancock on behalf of Worldlink Resources. The company went on to receive almost £260mn worth of state contracts to supply goggles and gowns to the NHS.
The Office of the Registrar of Consultant Lobbyists said in a case report it had contacted Newmark twice late last year to ask why he had not registered himself or his consultancy after contacting Hancock on behalf of Worldlink Resources.
The ORCL closed its investigation into Newmark after his lawyers, Carter Ruck, and chartered accountancy firm Shipleys said the payments Newmark’s consultancy received for the work were from an overseas company and so did not trigger a requirement for UK VAT registration.
Under current lobbying legislation, a person or organisation is not required to register as a consultant lobbyist if they are not registered to pay VAT because, for example, they are working for a foreign client or their annual income is less than £85,000.
Critics said the loophole in the current legislation was a sign of the UK’s lax approach to regulating lobbying.
Alastair McCapra, chief executive of the Chartered Institute of Public Relations, a professional body, said he believed the VAT threshold rules amounted to a “significant loophole” that meant the register was “not fit for purpose”.
McCapra said having a workable register of lobbyists was a “necessary tool in a functioning democracy and ours isn’t up to the task”, noting the UK’s register captured drastically fewer lobbyists per capita than comparable systems in Canada, the US and the EU.
Newmark served as civil society minister in 2014 and stood down as an MP in 2015 after sending sexually explicit photos to an undercover journalist.
His consultancy had been dormant until 2020, according to filings at Companies House, the UK corporate register. It posted an increase in capital and reserves from minus £2,300 in 2020 to £2.4mn in 2021, company filings show.
Jolyon Maugham, founder of the legal non-profit the Good Law Project, said the VAT loophole was “curious”, adding that he would have expected British legislation to be “particularly concerned with lobbying for foreign interests”.
The ORCL has for some time called for the removal of the so-called “VAT registration test”, which determines if an individual or company can register as a lobbyist. The rules actively prohibit non-VAT registered persons or entities from being registered.
In evidence submitted to MPs in 2022, the body said it was “hard to see” how the requirement supported the “transparency intention” of the act of parliament that created the register, allowing those providing services to foreign companies to circumvent public scrutiny.
The “act’s transparency purposes would be supported by the removal of the VAT registration test”, it added.
Carter Ruck said “neither Brooks Newmark nor his company were registered, or required to be registered, for VAT at the time [of offering services to Worldlink Resources] nor are they now”.
“The Office of the Registrar has concluded that he does not have to register. Indeed he could not have registered at the relevant time,” the law firm added.
Worldlink Resources was contacted for comment. Shipleys did not respond to a request for comment. ORCL declined to comment on Newmark’s case.
