Treasury sub-committee chairman John Mann singled out the Crown Dependencies for criticism as he announced a new six-month tax avoidance and evasion review, which aims to investigate the role of offshore jurisdictions in exploiting ‘holes in the tax system’.
Last year the EU published a blacklist of 17 jurisdictions it views as non-cooperative for tax purposes. Jersey was not included but was among 40 other jurisdictions asked to reform their tax structures by next year, which some commentators have dubbed a ‘grey-list’.
The States was asked by the EU to address the issue of economic substance – whether companies registered for tax purposes in the Island carry out real activity – and Chief Minister Ian Gorst said new legislation was being considered in response.
Commenting on the matter, Mr Mann said the UK government had to clamp down on British territories which ‘look the other way as the world’s financial elite use its legal structures to hide their wealth from prying eyes’.
‘Jersey, Guernsey, the Isle of Man, Bermuda and the Cayman Islands are on the EU grey-list of unco-operative tax jurisdictions,’ he said.
‘If they do not co-operate further, they may be placed on the blacklist. 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.’
Mr Mann added that he wanted representatives of the British offshore jurisdictions to come forward and assist with his review.
‘Over the next six months I will be chairing a Treasury subcommittee inquiry into avoidance and evasion, aiming to unpick the failures of policy and resourcing that have allowed the tax base to be undermined,’ he said.
‘We need to be sure that HMRC attracts the best and the brightest, who will be dogged and determined in making sure everyone pays what they owe, and has the resources it needs from government.
‘We’ll be pressing government hard, too. Ministers need to account for the holes in the tax system. They also need to explain how the relationship with Crown Dependencies and overseas territories works, and how they can clamp down.’
He added: ‘I want to hear from the dependencies and territories themselves.’