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Do we need more regulation on tax havens?

Do we need more regulation on tax havens?

Mark Field, the Tory MP for the Cities of London and Westminster, has called on the coalition to stop more regulation on tax havens.

Field claims tax havens are an economic benefit and the debate surrounding them is one-sided. The TUC has estimated that HMRC losses £25 billion through corporate tax avoidance; an estimate Field says is way too high.

He went on to explain that Britain has constitutional relationships with 30 financial centres offshore and it is paramount that any new regulations are appropriate. The Crown Dependencies between them provided $332.5 billion net financing to UK banks in the second quarter of 2009 alone.

Tax havens lead the race to attract global capital and in fact a recent report by ActionAid claimed that ninety-eight of the UK’s FTSE 100 companies have set up subsidiaries in tax havens.

The banking sector in particular is a large user of tax havens. Between them, Barclays, HSBC, Lloyds and RBS own 1,649 tax haven companies. Barclays for example has 174 companies based in the Cayman Islands. Jersey has also proved to be a highly popular place to set up a subsidiary.

Meanwhile, the CIoT says all taxpayers should be able to take advantage of initiatives to get their tax affairs in order.

The Institute said schemes offering taxpayers reduced penalties if they own up to previously undeclared tax liabilities should be extended to cover more occupations. So far, disclosure schemes have been offered to medics, plumbers and most recently, tutors and coaches.

John Whiting, the CIoT’s tax policy director, said there’s a lot of benefit to be gained from HMRC’s offshore initiatives, because they encourage people to sort out their tax affairs. But, rather than just allowing certain sectors that opportunity, a cover-all initiative should be open to all.

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Image: Little One by Sukanto Debnath

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