UK to Intensify Pressure on Crown Dependencies over Tax Haven Status

Strategic Insights -

The UK government is to take further steps in its efforts to end tax havens and harmonize European taxation. Chancellor Gordon Brown will announce in the forthcoming Budget that the Inland Revenue will be given powers to negotiate information-exchange agreements with the Crown Dependencies and British overseas territories, including the Cayman Islands and Bermuda. This move aims to address tax evasion routed through Britain's dependent territories, which is estimated to result in £1 billion in lost revenue each year. The goal is also to prevent "designer taxation" where tax havens tailor rates to help individual companies avoid UK tax.

Key Takeaways:

  • The UK government will give the Inland Revenue powers to negotiate information-exchange agreements with the Crown Dependencies and British overseas territories.
  • The move aims to address tax evasion routed through Britain's dependent territories, which is estimated to result in £1 billion in lost revenue each year.
  • Chancellor Gordon Brown wants to prevent "designer taxation" where tax havens tailor rates to help individual companies avoid UK tax.
  • The Crown Dependencies, including the Channel Islands and the Isle of Man, have been under pressure to tighten financial regulation over the past two years.
  • The UK has proposed international information exchanges as an alternative to a 20 per cent withholding tax on non-resident savings.

Statistics:

  • £1 billion: The estimated annual revenue the Treasury believes it is losing due to tax evasion routed through Britain's dependent territories.
  • 98 per cent: The top rate of UK income tax in the 1970s, when the tax gap between onshore and offshore investments for UK citizens was wider.
  • 2 years: The period over which the UK government has been pressuring the Crown Dependencies to tighten financial regulation.
  • 20 per cent: The proposed withholding tax on non-resident savings in the European Union.

Sources:

  • "Orthodox attitudes are doomed, says Cameron" by Val Corcoran from the Times (exact date not specified)
  • "British Overseas Territories Association" (exact date not specified)
  • "OECD to draw up list of tax havens" from BBC News (exact date not specified)
  • "Gordon Brown tables new tax powers" from The Guardian (exact date not specified)