The British government is about to get tough with so-called tax havens that are dragging their feet on revealing the secret ownership of thousands of offshore companies.
One of the main thrusts of Britain’s drive to clean up the murky world of tax avoidance has been to put pressure on Crown Dependencies and Overseas Territories to make details about offshore companies more transparent.
These financial centres are self-governing but subject to some UK legislation.
They include the Cayman Islands, the British Virgin Islands, the Isle of Man, Gibraltar, Jersey and Guernsey.
Minister in The Cayman Islands and British Virgin Islands have stated they will not join the register, but British ministers have written to them giving them until November to comply.
Threats and pressure
Tory MP Sir Eric Pickles has revealed the government is fed up with a lack of action over the companies register and is about to launch a three-pronged attack aimed at making the jurisdictions comply with their promises to release the data.
“The attitude of the governments in these places is unacceptable,” said Pickles.
“They say they want to tackle tax evasion and money laundering, but are hardly taking any action to tackle the problems.”
Pickles explained that the government may bring in new laws to make the financial centres hand over corporate records as a last resort, but are trying other avenues first.
“Officials are having a word in their ear and some politicians on these islands are under some pressure to act before the government forces their hand,” said Pickles.
Britain wants to establish a public register of the beneficial owners of all companies in the UK and the offshore financial centres so HM Revenue & Customs (HMRC) can identify who controls these companies and who owns the assets and takes any profits from them.
However, offshore centres built considerable financial businesses based on secrecy and behind-the-curtain anonymity.
New tax drives by the US with Foreign Account Tax Compliance Act (FATCA) and the UK with a similar law have changed the rules for offshore financial centres. Both laws demand financial institutions supply financial information about US and UK taxpayers to the Internal Revenue Service (IRS) and HMRC.
New agreements are also on the way bringing in similar automatic information swapping between around 100 countries in 2017.
Governments are also concerned about multinational companies sending their profits to offshore centres where they pay little or no tax.