DAVID Cameron won agreement yesterday from Britain’s network of overseas territories and Crown dependencies to sign up to a clampdown on tax dodging.
With the UK preparing to host the G8 at Loch Erne in Northern Ireland this week, the Prime Minister told a pre-summit conference that he had signed a deal with territories and dependencies – including Jersey, the Isle of Man and Bermuda – so they share more information on the offshore tax arrangements within their borders.
Amid fears that progress on international tax avoidance could be hampered by other members, including Russia and Canada, he told fellow G8 nations it was now up to them to put pressure on havens elsewhere in the world.
Cameron claimed his deal –combined with a separate bid to expose the true owners of shadowy “shell” companies which collect profits – demonstrated a genuine effort by the G8 hosts to show there was political will behind the attempt.
However, tax reformers last night said the UK’s efforts could be defeated by continuing loopholes in tax havens and by poor records within the UK, which currently allow many firms to not register their details. The claims prompted Chief Secretary to the Treasury Danny Alexander to warn that if British territories were not complying fully with efforts to crack down on tax avoidance, then the UK could compel them to with new laws.
Cameron yesterday unveiled two measures designed to increase tax collection. It has been estimated that, globally, tax evasion is costing nations $3 trillion (£1.9bn) a year in lost revenues. He said the UK would create a new central registry of company ownership which, he claimed, would show up who owns which company and who benefits from it.
He also said that “each and every one of our overseas territories and crown dependencies has agreed to sign up to the multi-lateral convention on information exchange to exchange information automatically with the UK and to produce action plans on beneficial ownership.”
Bermuda, the British Virgin Islands, the Cayman Islands, Gibraltar, Anguilla, Montserrat, the Turks and Caicos Islands, Jersey, Guernsey and the Isle of Man were all represented at the talks.
There were questions over both steps last night.
Cameron stepped back from making the new registry of company interests public, amid fears that if Britain acted alone, it would put UK companies at a massive disadvantage to foreign competitors.
Meanwhile, leading tax evasion campaigner Richard Murphy warned of the workload.
He said: “The UK’s law on companies filing information – with the register of Companies House and HMRC – is simply not enforced now. So why on earth do we think this new law will be enforced unless the resources are put into ensuring that it is?”
There were also concerns that the deal with overseas territories would not cover “trusts”, which could still be used by firms to hide details.
Labour leader Ed Miliband said Britain needed to use its “considerable legal power and authority” to ensure all the tax havens signed up to a deal.
Asked about the possibility of imposing such requirements, Mr Alexander said: “I think it’s better to do it through persuasion… but look, if in the end it comes to that, I dare say we would consider it.”
The G8 summit begins in earnest tomorrow, with the crisis in Syria certain to be at the top of the agenda facing the nations.