Government highlighted fact telecommunications giant was major Tory donor as it refused search warrant request

The Government highlighted the fact that a telecommunications giant was a major donor to the Conservative Party as it refused to assist a French investigation into the firm over suspected money laundering.

A letter from HMRC which was leaked to BuzzFeed News reportedly said that Lycamobile was “extremely unlikely to agree to having their premises searched”.

But the letter from the team that handles requests from foreign governments for law enforcement assistance also referenced donations made by Lycamobile to the Tories as well as money given to a charity associated with the Prince of Wales.

It said: “It is of note that they are the biggest corporate donor to the Conservative party led by Prime Minister Theresa May and donated 1.25m Euros to the Prince Charles Trust in 2012.”

The revelation has prompted concerns about whether HMRC has taken political considerations into account during its decision making process with Labour claiming the Tories have “serious questions to answer on this matter”.

The Tories said all donations to the party “comply fully with the law”.

HMRC is understood to regret including the reference to the Conservative Party with officials adamant that it did not have any influence on decision making.

The Government has stressed that the information was only included as background information.

Meanwhile, Downing Street said the request was “rejected because it did not contain sufficient information for HMRC to seek a search warrant”.

An HMRC spokeswoman said: “HMRC always investigates suspected rule breaking professionally and objectively and is never influenced by political considerations.

“The facts speak for themselves: last year alone we secured an additional £8 billion in tax from the largest businesses by tackling avoidance, evasion and non-compliance.”

BuzzFeed reported that when it had first asked HMRC about the letter the agency had rejected the idea that party political donations would have been cited.

A press officer reportedly said that “no HMRC official would ever write such a letter” and that the UK was “not some third world banana republic where the organs of state are in hock to some sort of kleptocracy”.

However, HMRC later said the contents of the email were “regrettable”.

John McDonnell, the shadow chancellor, called on Philip Hammond to explain what had happened.

He said: “If true, these are deeply concerning revelations. The fact that a Tory donor could be allowed to potentially subvert the system will look bad to taxpayers who play by the rules.

"The Tories have serious questions to answer on this matter, and I hope the Chancellor immediately comes forward to explain this behaviour by HMRC and ensure there was no undue pressure exerted by Conservative Party officials."

The Prime Minister’s official spokesman said: “HMRC never takes political donations into account when it makes decisions on whether to investigate a business.

“The request was rejected because it did not contain sufficient information for HMRC to seek a search warrant.”

He added: “My understanding from HMRC is that the information was only provided as background to offer a detailed profile of the company to their French counterparts but it was not taken into account by HMRC in deciding whether to support the French application.”

The Conservative Party stopped accepting donations from Lycamobile almost two years ago.

It has not received any donations from the firm since July 2016.

A Conservative spokesman said: “All donations to the Conservative Party are properly and transparently declared to the Electoral Commission, published by them, and comply fully with the law.”

Concerns have previously been raised about Lycamobile’s business practices which prompted French prosecutors to launch a probe into the firm.

Lycamobile continue to deny all allegations of wrongdoing.