A British parliamentary subcommittee will look into tax avoidance and evasion.
British Parliament and Big Ben

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

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 Party's John Mann

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 [the U.K.] 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.

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