INVESTIGATIONS

British inquiry promises ‘no stone left unturned’ as it tackles tax avoidance and evasion

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A British par­lia­men­tary sub­com­mit­tee has opened an inquiry into tax avoid­ance and eva­sion in the wake of Paradise Papers rev­e­la­tions.

After the Paradise Papers, it is clear that this issue hasn’t gone away and con­tin­ues to deprive the [British] tax­pay­er of bil­lions of pounds each year,” said John Mann, a Labor Party MP and chair­man of the Treasury sub­com­mit­tee.

Together we will leave no stone unturned in under­stand­ing the root cause of this prob­lem and how we in Parliament can tack­le it.”

Over the next six months, the sub­com­mit­tee is expect­ed to hear evi­dence from wit­ness­es, includ­ing those accused of aggres­sive tax avoid­ance as well as their accoun­tants and advi­sors.Labor MP John Mann said the U.K. should con­sid­er it ‘a mat­ter of nation­al shame’ that the Union Jack gives shel­ter to the finan­cial elite.

Labor MP John Mann said the U.K. should con­sid­er it ‘a mat­ter of nation­al shame’ that the Union Jack gives shel­ter to the finan­cial elite.

In an unprece­dent­ed move, MPs on the com­mit­tee also hope to invite min­is­ters from the U.K.’s Crown Dependencies and Overseas Territories to appear before them.

Mann said the com­mit­tee would be “look­ing in depth” at the role played by these juris­dic­tions, many of which are well known tax and secre­cy havens.

Britain’s Crown Dependencies include Jersey, Guernsey and the Isle of Man, while its Overseas Territories include the British Virgin Islands, Bermuda and the Cayman Islands.

All of these juris­dic­tions are large­ly self-gov­ern­ing, but main­tain con­sti­tu­tion­al ties to the U.K.. Many of them have close com­mer­cial links to Britain’s bank­ing and insur­ance indus­tries.

Writing in The Guardian today, Mann point­ed out that the British Virgin Islands, like many Overseas Territories, “proud­ly flies the Union Jack” as part of its nation­al flag. “We should regard it as a mat­ter of nation­al shame that the Crown Dependencies and Overseas Territories that fly our flag give shel­ter to the wealth of the world’s finan­cial elite.”

A British par­lia­men­tary com­mit­tee does not have the author­i­ty to sum­mon indi­vid­u­als who are res­i­dent out­side the U.K. But MPs hope politi­cians from the off­shore world will attend vol­un­tar­i­ly.

The U.K. inquiry comes a month after the European Parliament estab­lished a spe­cial com­mit­tee to inves­ti­gate tax avoid­ance and eva­sion issues raised by the Paradise Papers. The European Parliament spe­cial com­mit­tee, will also pay “par­tic­u­lar atten­tion” to the U.K.’s Crown Dependencies and Overseas Territories.

Separately, the U.K.’s Treasury sub­com­mit­tee also said it will inves­ti­gate con­cerns that British tax author­i­ties are offer­ing favor­able arrange­ments – “sweet­heart deals” – to large cor­po­ra­tions while small­er busi­ness­es face “harsh treat­ment”.

The MPs hope to build on the work of the U.K. Parliament’s pub­lic accounts com­mit­tee, which con­duct­ed a sim­i­lar inquiry in 2012, shed­ding light on tax avoid­ance at Google, Starbucks and Amazon.

In addi­tion, the full Treasury select com­mit­tee will car­ry out an inquiry into more than 12 bil­lion pounds a year in val­ue-added tax income that the U.K. fails to col­lect. It will scru­ti­nize the role played by tax advis­ers who encour­age clients to engage in aggres­sive VAT avoid­ance.

VAT is a Europe-wide tax linked to the price paid for goods and ser­vices, rather than to prof­its.

A num­ber of com­plex VAT avoid­ance arrange­ments involv­ing yacht and jet pur­chas­es were exposed in the Paradise Papers. Many of these took advan­tage of favor­able VAT rules in the Isle of Man.

Reporting by Simon Bowers

British inquiry promis­es ‘no stone left unturned’ as it tack­les tax avoid­ance and eva­sion

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