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Panama Papers: Cameron under pressure over tax havens Panama papers: UK tax havens 'should face direct rule'
(about 1 hour later)
David Cameron is coming under pressure to stop British overseas territories and Crown dependencies being used by the wealthy to reduce their tax bills. The government should consider imposing "direct rule" on its overseas territories and dependencies if they do not comply with UK tax law, Labour Party leader Jeremy Corbyn has said.
A massive data leak from Panama-based law firm Mossack Fonseca showed it registered more than 100,000 secret firms to the British Virgin Islands. A huge data leak from Panama-based Mossack Fonseca showed the law firm registered more than 100,000 secret firms to the British Virgin Islands.
Labour Party leader Jeremy Corbyn said the government needed to "stop pussyfooting around" on tax dodging. Mr Corbyn said their governments must understand the "anger" of Britons.
Downing Street said the UK was "ahead of the pack" on tax transparency.Downing Street said the UK was "ahead of the pack" on tax transparency.
Eleven million leaked documents showed how Mossack Fonseca clients were able to launder money, dodge sanctions and avoid tax - the law firm says it has operated beyond reproach for 40 years.Eleven million leaked documents showed how Mossack Fonseca clients were able to launder money, dodge sanctions and avoid tax - the law firm says it has operated beyond reproach for 40 years.
There are links to 12 current or former heads of state in the data, including dictators accused of looting their own countries.There are links to 12 current or former heads of state in the data, including dictators accused of looting their own countries.
Reaction around the world includes:Reaction around the world includes:
Leaked files also mention Mr Cameron's late father, Ian Cameron, who used one of the most secretive tools of the offshore trade after he helped set up a fund for investors. Leaked files also mention Mr Cameron's late father, Ian, who used one of the most secretive tools of the offshore trade after he helped set up a fund for investors.
Downing Street sources told the BBC Mr Cameron did not have any shares in Blairmore Holdings, the Panama-based company his late father Ian helped set up in 1982.
The sources are not saying that other members of the Cameron family do not own shares in the offshore firm, however.
'Honey pots of corruption''Honey pots of corruption'
At the launch of Labour's local government campaign, Mr Corbyn will say: "It is time to get tough on tax havens. Britain has a huge responsibility. Many of those tax havens are British overseas territories or Crown dependencies. A number of British overseas territories and Crown dependencies are named in the files raising the question of what the UK can do about them.
"As the leaked documents show, tax havens have become honey pots of international corruption, tax avoidance and evasion. Asked if direct rule was the solution, Mr Corbyn said: "If the local government is simply going to condone this level of brass badge companies and tax avoidance and tax evasion of money that has been made in Britain... then that's something that has to be considered.
"They are sucking tax revenues out of our own country and many others fuelling inequality and short-changing our public services and our people. "There has to be an observance of UK tax law in those places," he told the BBC.
"There cannot be one set of tax rules for the wealthy elite and another for the rest of us." "If they've become a place for systemic evasion and short-changing of the public in this country then something has to be done about it. Either those governments comply or a next step has to be taken.
Former Business Secretary Vince Cable told the BBC: "We do have some powers. We can't send gunboats these days but we can take the small territories under direct rule." He said if the government decided to impose direct rule, it could be done "almost immediately".
Former Business Secretary Vince Cable, a Liberal Democrat, said: "We can't send gunboats these days but we can take the small territories under direct rule."
For three years, the UK government imposed direct rule over the Turks and Caicos Islands after evidence was found of widespread corruption among the ruling elite. It was only after it implemented rules around sharing tax information that home rule was restored in 2012.For three years, the UK government imposed direct rule over the Turks and Caicos Islands after evidence was found of widespread corruption among the ruling elite. It was only after it implemented rules around sharing tax information that home rule was restored in 2012.
'Nuclear option' Tax havens: What are they and why they matter?
Dominic Grieve, former Conservative attorney general, said the Tories and the coalition government had done more to close tax loopholes than the Labour Party. Two broad qualifications for being a tax haven are to have a low or zero rate of income tax and guarantee the rich a cloak of secrecy they would not receive in their own country.
Removing self governance in overseas territories was a "bit of a nuclear option" and the consequences on the people and their economy needed careful consideration, he told BBC Radio 4's Today programme. They matter because of lost revenue - it is estimated that UK tax authorities could be losing up to £7.2bn a year from avoidance and evasion.
"If the havens in overseas territories were shut down, people would go elsewhere where there might be far fewer regulations which would encourage the money laundering and criminality we want to suppress," he said. They have also been used to cover up criminal activity.
Dominic Grieve, former Conservative attorney general, said removing self governance in overseas territories was a "bit of a nuclear option" and the consequences on the people and their economy needed careful consideration.
If havens in overseas territories were shut down, people would go elsewhere where there might be far fewer regulations which would encourage the money laundering and criminality we want to suppress, he told BBC Radio 4's Today programme.
Geoffrey Robertson QC, an international human rights lawyer, said: "The British Empire has shrunk largely to a number of tax havens - treasure islands, as they are known."Geoffrey Robertson QC, an international human rights lawyer, said: "The British Empire has shrunk largely to a number of tax havens - treasure islands, as they are known."
"Britain is at the heart - the hub - of international tax avoidance by allowing these little remnants of empire to have tax secrecy laws and enable offshore trusts and offshore companies to operate without transparency."Britain is at the heart - the hub - of international tax avoidance by allowing these little remnants of empire to have tax secrecy laws and enable offshore trusts and offshore companies to operate without transparency.
"These little countries are endowed by international law with sovereignty. They can set up their own regimes which promise utter secrecy and have no transparency.""These little countries are endowed by international law with sovereignty. They can set up their own regimes which promise utter secrecy and have no transparency."
He said change could come with "some form of international convention" to require transparency, lawyers reconsidering their ethics and an international enforcement body able to inquire, inspect and punish.He said change could come with "some form of international convention" to require transparency, lawyers reconsidering their ethics and an international enforcement body able to inquire, inspect and punish.
Since 2009, many attempts have been made to crack down on abuses. More than 700 tax transparency deals have been signed globally.
Places including Switzerland, the Channel Islands and Luxembourg have tightened the rules, but others like Panama and the British Virgin Islands have been criticised for not doing enough.
Next month, Mr Cameron will chair an international summit in London on tax avoidance and evasion, where the use of offshore tax havens to escape scrutiny will be high on the agenda.
Panama Papers - tax havens of the rich and powerful exposedPanama Papers - tax havens of the rich and powerful exposed
During his speech, Mr Corbyn is also expected to call for HM Revenue and Customs (HMRC) to be given more resources to tackle tax dodgers.
HMRC says it has been at the forefront of efforts to improve international tax transparency.
Using offshore companies is not illegal, but this leak has intensified calls for more transparency and reform.
HMRC said information it had received on offshore companies was the subject of "intensive investigation" and this data would be acted on "swiftly and appropriately".
Mr Cameron has come under further pressure following the leak over his late father's business affairs.
Ian Cameron was among those named in relation to investments set up by Mossack Fonseca.
Downing Street said the issue of whether the Cameron family still had funds in offshore investments was a "private matter".
Dominic Grieve said he understood Mr Cameron had no shares in offshore companies, adding there was a need for transparency among public figures.