Tory MP Jacob Rees-Mogg defends his firm setting up fund in Ireland ahead of possible 'hard Brexit'

Christopher Hope
Jacob Rees-Mogg MP - REUTERS

Top Tory Eurosceptic MP Jacob Rees-Mogg has defended his City firm for setting up an investment fund in Ireland after it emerged that its clients were warned about the risks of a "hard" Brexit.

Somerset Capital Management, the MP’s London-based firm, has launched a new investment vehicle in Dublin.

The news is potentially embarrassing because Mr Rees-Mogg has suggested that a hard Brexit, when the UK would walk away next year without an exit deal or trade arrangement, should not be ruled out.

A prospectus for Somerset Capital Management Icav, a Dublin-based tax efficient “collected asset vehicle” investment structure, was registered in March with the Central Bank of Ireland. The new business will be subject to Irish and European Union rules.

Under the “risks” section of the investment prospectus, Brexit is directly addressed, including the potential ramifications for SCM’s Irish structure during Britain’s exit negotiations with the EU, Private Eye magazine reported.

The fund says: “During, and possibly after, this period there is likely to be considerable uncertainty as to the position of the UK and the arrangements which will apply to its relationships with the EU.

“As [the firm is] based in the UK and a fund’s investments may be located in the UK or the EU, a fund may as a result be affected by the events described above.”

Jacob Rees-Mogg MP Credit:  David Rose/ David Rose

Mr Rees-Mogg is the founder and non-executive chairman of Somerset Capital Management, as well as being a partner in the business.

He said in a statement: "A number of existing and prospective clients requested domiciled access to Somerset's products. The decision to launch the fund was nothing whatsoever to do with Brexit."

Mr Rees-Mogg added that his firm had funds based all over the world, including in Australia, the US and the Cayman Islands, and that "people outside the EU are used to Irish domiciled funds".

He said the warnings of the risks of Brexit were "not a policy statement by SCM" but simply guidance to investors which had been drafted by lawyers.

Mr Rees-Mogg co-founded and owns a stake in SCM, for whom he still acts in a part-time role. He does not make investment decisions.