Fifty Shades of Tax Dodging

UK takes two-faced approach to tax, new report suggests

3 November 2015 – The UK government has a ‘Janus-faced’ approach to tax, a new report suggests today: promising an increasingly intolerant approach to evasion and avoidance while being an aggressive participant in global tax competition and tolerating the UK tax havens which facilitate financial crime across the world.

The report, Fifty Shades of Tax Dodging, compares 14 European Union countries’ roles in the global tax system and gives the UK a mix of red and yellow indicators. It comes as a second new publication today, the Financial Secrecy Index 2015, warns that the UK’s role in global financial secrecy remains “a huge concern”.

Joseph Stead, the Christian Aid tax expert who wrote the UK chapter of Fifty Shades, said: “The UK Government pledged in its manifesto that it would ‘lead the world in tax and transparency’ but today’s report reveals that overall, the UK still has a lot of work to do to claim that title.

Its tax and secrecy policies are as bad as many other European Union member states and indeed worse than some, such as Denmark and Slovenia.

“Over the last 5 years the UK has led on some areas, but there’s a long way to go and in other respects the UK remains a big part of the problem.”

One example of the UK’s inconsistent approach is that it is leading the world by creating a new public register of the real (or ‘beneficial’) owners of UK companies – and exerting a good influence on similar developments in Europe.

However, the UK continues to permit its tax havens – especially those in the Caribbean such as the British Virgin and Cayman Islands – to continue hosting more than 500,000 secretly-owned companies, some used in tax evasion and corruption around the world.

This month, Christian Aid and its supporters are calling on David Cameron to ensure the UK’s Overseas Territories set up public registers of who owns the companies they host.

Mr Stead added: “The Prime Minister can hardly host an anti-corruption summit next year without cleaning up the secrecy that thrives in the Overseas Territories on his watch. They have ignored his warnings for two years and with just weeks to go until their annual conference in London, the Prime Minister has to call time on their secrecy.”

In relation to the UK’s overall approach to tax, the report states: “The UK Government has continued to pursue what can at times appear to be a Janus-faced approach…[and] appears to be attempting to be simultaneously one of the loudest advocates for new measures to address tax avoidance and tax and development issues, while also being one of the most aggressive countries in terms of promoting tax competition and blocking the creation of a global tax body to allow developing countries an equal voice.

Whether it is possible to maintain such approach for a sustained period of time is unclear. However, what does seem clear from the developments in 2015 is that the new UK Government intends to try.”
Fifty Shades of Tax Dodging was co-ordinated by Eurodad, a network of European organisations of which Christian Aid is a member.

The UK’s patchy record on tax and transparency is also highlighted this week by the new Financial Secrecy Index 2015, produced by the Tax Justice Network. The Index reflects countries’ levels of secrecy and their importance within global finance. This year, the ‘top’ five countries are Switzerland (worst of all) followed by Hong Kong, USA, Singapore and the Cayman Islands (one of the UK’s Overseas Territories).

Announcing the new Index today, the Tax Justice Network described the UK’s role in global financial secrecy as “a huge concern”. It said: “Though the United Kingdom isn’t in our top ten, it supports a network of secrecy jurisdictions around the world, from Cayman to Bermuda to Jersey to the British Virgin Islands, whose trusts and shell companies hold many trillions of dollars’ worth of assets.

Had we treated the UK and its dependent territories as a single unit it would easily top the 2015 index, above Switzerland.”

For more information please contact Rachel Baird on 00 44 (0)207 523 2446 or rbaird@christian-aid.org or 07850 242950