Politicians, campaigners and religious leaders have called on the UK government to act against offshore tax havens, after a leak of two million emails and other documents, mainly from the British Virgin Islands, named the owners of thousands of offshore companies and trusts. Details have been widely reported in the UK and elsewhere.
‘Not all of those named necessarily have secret bank accounts,’ the New York Times noted. A London-based law firm suggested that the leak could have an impact on some people who do not have interests in offshore structures.
David Cameron has come under pressure to take action against ‘Britain’s secretive offshore industry’ at the G8 summit in June, The Guardian reported last week in the light of leaked evidence that ‘politicians and tycoons from all over the world have used the British Virgin Islands [BVI] to hide funds’.
As Tax Journal reported last November, BVI is a British overseas territory and has a population of about 30,000. More than a million BVI companies had been incorporated, The Guardian had reported, but the UK ‘refuses to step in and force it to reform’.
But the leak to the International Consortium of Investigative Journalists was ‘received with glee’ by German officials, according to the New York Times. Journalists from 46 countries had collaborated to analyse more than 260 gigabytes of data.
Separately, more than 70 religious leaders from across the G8, including the Archbishop of Canterbury, Justin Welby, and the Archbishop of Westminster, Vincent Nichols, wrote to the Financial Times calling on heads of government to reflect on progress at the start of a 1,000-day countdown to the deadline set for achieving the Millennium Development Goals.
‘With a focus on tax, trade and transparency, the UK presidency of the G8 this year has the potential to advance the MDG agenda in ways that strike at the underlying causes of poverty, in particular by ensuring the wealth created by developing countries is not lost through unfair tax practices, a lack of transparency or a failure to secure the benefits of trade for developing countries,’ they wrote.
The religious leaders recommended a G8 convention on tax transparency that ‘commits signatory countries to preventing individuals and companies from hiding wealth so that it is untraceable’.
‘Stripping away the biggest mystery’
Millions of internal records were leaked from Britain’s offshore financial industry, The Guardian reported on 3 April. In collaboration with The Guardian and other international media including the BBC and the Washington Post, the Washington-based International Consortium of Investigative Journalists (ICIJ) exposed the identities of ‘thousands of holders of anonymous wealth from around the world’.
The ICIJ said the investigation was part of a multi-year project aimed at ‘stripping away the biggest mystery associated with tax havens: the owners of anonymous companies’.
The identities of the owners of companies in offshore tax havens normally remain secret, The Guardian noted. ‘The naming project may be extremely damaging for confidence among the world’s wealthiest people, no longer certain that the size of their fortunes remains hidden from governments and from their neighbours,’ wrote the paper’s investigations editor David Leigh.
Leigh quoted Lord Oakeshott, the Liberal Democrat peer and former Treasury spokesman, as saying: ‘How can David Cameron keep a straight face calling for the G8 to make big business pay tax when we let the BVI use British law and British protection to suck in billions in dirty money?’ Oakeshott wrote on Twitter: ‘BVI – a stain on the face of Britain.’
An earlier investigation into ‘sham directors’ revealed that two dozen Britons were ‘purporting to control thousands of companies’, Leigh said. But British ministers were ‘not ready to act’.
The UK’s Department for Business, Innovation and Skills (BIS) said: ‘The vast majority of companies and directors do comply with the law and they should not be unfairly burdened, so we will focus our attention on those who deliberately seek to break the law’. The department had nothing further to add when contacted by Tax Journal today.
‘No excuse’
Global Witness said the ‘massive cache of leaked documents’ demonstrated how ‘hidden ownership of shell companies can facilitate corruption, tax dodging and possibly worse’. Global Witness campaigner Stuart McWilliam said: ‘Hidden company ownership enables corruption, state looting and dodgy deals that directly deplete state budgets and entrench poverty.
‘Arms traffickers, drug dealers, and corrupt politicians all use shell companies to carry out their illicit activity. It is not just offshore centres that facilitate this sort of secrecy. Lawyers, banks and company service providers in the UK and US are expert at providing anonymity to those who can pay,’ he added.
‘By requiring the names of the ultimate beneficial owners of all companies to be made public, G8 leaders could provide a huge boost to efforts to reduce corruption and financial crime globally and to promote development worldwide. There is no excuse for them not to act.’
The Tax Justice Network said: ‘Britain, by virtue of its partial control and influence over around half the world's big tax havens, is the single biggest player in the offshore system. If Britain were to act, a big part of the problem could be seriously addressed.’
In a letter to The Guardian representatives of Global Witness, Christian Aid, Oxfam and Save the Children UK called on the G8 to ‘act to end financial secrecy by agreeing to publish a registry of who owns companies, foundations and trusts, automatically share tax information with other countries, and push tax havens to do the same’. This would help governments north and south to ‘recover billions of dollars which could transform the lives of millions of people living in poverty’, they wrote.
‘Developing countries lost an estimated $859bn in 2010 to illicit financial outflows – more than they received in aid, and more than the Food and Agriculture Organisation of the UN estimates would be required to end hunger globally.’
‘Legal and regulatory advantages’
But the Financial Times quoted Peter Tarn, managing partner at BVI law firm Harneys, as saying that legal and regulatory advantages were important reasons for holding Asian assets through BVI companies: ‘There is clearly an element of the market that is driven by a desire for confidentiality, not necessarily from revenue authorities.’
A London-based law firm alerted clients to the possible impact of the leak on their interests ‘or reputation’. Mishcon de Reya notes on its website that ‘BVI has established itself as a premier domicile for corporate and private wealth management, and investment funds’.
The firm noted in a client briefing this week that the leak may affect people who do not use offshore structures: ‘You may be involved in a dispute with a counterparty which has assets based offshore, or you may be planning to do business with an entity whose commercial confidentiality has now been breached. In addition, you may be operating in jurisdictions whose political bodies may now be seen to be compromised as a result of the publication of information on offshore commercial interests.’
The firm advised readers to ‘be alive to the possibility that your confidential information may be published online and to monitor the source of the reporting at http://www.icij.org/offshore for information relevant to you’.
Politicians, campaigners and religious leaders have called on the UK government to act against offshore tax havens, after a leak of two million emails and other documents, mainly from the British Virgin Islands, named the owners of thousands of offshore companies and trusts. Details have been widely reported in the UK and elsewhere.
‘Not all of those named necessarily have secret bank accounts,’ the New York Times noted. A London-based law firm suggested that the leak could have an impact on some people who do not have interests in offshore structures.
David Cameron has come under pressure to take action against ‘Britain’s secretive offshore industry’ at the G8 summit in June, The Guardian reported last week in the light of leaked evidence that ‘politicians and tycoons from all over the world have used the British Virgin Islands [BVI] to hide funds’.
As Tax Journal reported last November, BVI is a British overseas territory and has a population of about 30,000. More than a million BVI companies had been incorporated, The Guardian had reported, but the UK ‘refuses to step in and force it to reform’.
But the leak to the International Consortium of Investigative Journalists was ‘received with glee’ by German officials, according to the New York Times. Journalists from 46 countries had collaborated to analyse more than 260 gigabytes of data.
Separately, more than 70 religious leaders from across the G8, including the Archbishop of Canterbury, Justin Welby, and the Archbishop of Westminster, Vincent Nichols, wrote to the Financial Times calling on heads of government to reflect on progress at the start of a 1,000-day countdown to the deadline set for achieving the Millennium Development Goals.
‘With a focus on tax, trade and transparency, the UK presidency of the G8 this year has the potential to advance the MDG agenda in ways that strike at the underlying causes of poverty, in particular by ensuring the wealth created by developing countries is not lost through unfair tax practices, a lack of transparency or a failure to secure the benefits of trade for developing countries,’ they wrote.
The religious leaders recommended a G8 convention on tax transparency that ‘commits signatory countries to preventing individuals and companies from hiding wealth so that it is untraceable’.
‘Stripping away the biggest mystery’
Millions of internal records were leaked from Britain’s offshore financial industry, The Guardian reported on 3 April. In collaboration with The Guardian and other international media including the BBC and the Washington Post, the Washington-based International Consortium of Investigative Journalists (ICIJ) exposed the identities of ‘thousands of holders of anonymous wealth from around the world’.
The ICIJ said the investigation was part of a multi-year project aimed at ‘stripping away the biggest mystery associated with tax havens: the owners of anonymous companies’.
The identities of the owners of companies in offshore tax havens normally remain secret, The Guardian noted. ‘The naming project may be extremely damaging for confidence among the world’s wealthiest people, no longer certain that the size of their fortunes remains hidden from governments and from their neighbours,’ wrote the paper’s investigations editor David Leigh.
Leigh quoted Lord Oakeshott, the Liberal Democrat peer and former Treasury spokesman, as saying: ‘How can David Cameron keep a straight face calling for the G8 to make big business pay tax when we let the BVI use British law and British protection to suck in billions in dirty money?’ Oakeshott wrote on Twitter: ‘BVI – a stain on the face of Britain.’
An earlier investigation into ‘sham directors’ revealed that two dozen Britons were ‘purporting to control thousands of companies’, Leigh said. But British ministers were ‘not ready to act’.
The UK’s Department for Business, Innovation and Skills (BIS) said: ‘The vast majority of companies and directors do comply with the law and they should not be unfairly burdened, so we will focus our attention on those who deliberately seek to break the law’. The department had nothing further to add when contacted by Tax Journal today.
‘No excuse’
Global Witness said the ‘massive cache of leaked documents’ demonstrated how ‘hidden ownership of shell companies can facilitate corruption, tax dodging and possibly worse’. Global Witness campaigner Stuart McWilliam said: ‘Hidden company ownership enables corruption, state looting and dodgy deals that directly deplete state budgets and entrench poverty.
‘Arms traffickers, drug dealers, and corrupt politicians all use shell companies to carry out their illicit activity. It is not just offshore centres that facilitate this sort of secrecy. Lawyers, banks and company service providers in the UK and US are expert at providing anonymity to those who can pay,’ he added.
‘By requiring the names of the ultimate beneficial owners of all companies to be made public, G8 leaders could provide a huge boost to efforts to reduce corruption and financial crime globally and to promote development worldwide. There is no excuse for them not to act.’
The Tax Justice Network said: ‘Britain, by virtue of its partial control and influence over around half the world's big tax havens, is the single biggest player in the offshore system. If Britain were to act, a big part of the problem could be seriously addressed.’
In a letter to The Guardian representatives of Global Witness, Christian Aid, Oxfam and Save the Children UK called on the G8 to ‘act to end financial secrecy by agreeing to publish a registry of who owns companies, foundations and trusts, automatically share tax information with other countries, and push tax havens to do the same’. This would help governments north and south to ‘recover billions of dollars which could transform the lives of millions of people living in poverty’, they wrote.
‘Developing countries lost an estimated $859bn in 2010 to illicit financial outflows – more than they received in aid, and more than the Food and Agriculture Organisation of the UN estimates would be required to end hunger globally.’
‘Legal and regulatory advantages’
But the Financial Times quoted Peter Tarn, managing partner at BVI law firm Harneys, as saying that legal and regulatory advantages were important reasons for holding Asian assets through BVI companies: ‘There is clearly an element of the market that is driven by a desire for confidentiality, not necessarily from revenue authorities.’
A London-based law firm alerted clients to the possible impact of the leak on their interests ‘or reputation’. Mishcon de Reya notes on its website that ‘BVI has established itself as a premier domicile for corporate and private wealth management, and investment funds’.
The firm noted in a client briefing this week that the leak may affect people who do not use offshore structures: ‘You may be involved in a dispute with a counterparty which has assets based offshore, or you may be planning to do business with an entity whose commercial confidentiality has now been breached. In addition, you may be operating in jurisdictions whose political bodies may now be seen to be compromised as a result of the publication of information on offshore commercial interests.’
The firm advised readers to ‘be alive to the possibility that your confidential information may be published online and to monitor the source of the reporting at http://www.icij.org/offshore for information relevant to you’.
