Party leader calls for radical action to tackle tax avoidance

The Labour leader yesterday suggested that the Government could impose “direct rule” on Britain’s overseas territories and crown dependencies, in an effort to curb tax avoidance.

Jeremy Corbyn was speaking after the high-profile leak of more than 11 million documents held by a law firm in Panama, which shed light on how individuals around the world had used tax havens to conceal their wealth.

In an embarrassment for the Government, it was found that British territories overseas were at the heart of the tax avoidance arrangements.

Speaking in Harlow, Mr Corbyn said that ministers needed to make it clear to places such as the British Virgin Islands that they had a responsibility to abide by the UK’s tax laws and he suggested that there was a precedent for Britain to impose direct rule.

“The point is that they are not independent territories,” he told the BBC.

“They are self-governing, yes, but they are British crown dependent territories. Therefore, surely, there has to be an observance of UK tax law in those places.

“If they have become a place for systematic evasion and short-changing 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.”

Dominic Grieve, the former Attorney General, said that a move to remove self-governance was “a bit of a nuclear option” and the consequences to the economies of the territories in question would have to be given careful consideration.

Speaking to BBC Radio 4’s Today programme, the Conservative MP said that there was a danger – if havens in overseas territories were closed down – that people may move their money to other locations where there were far fewer regulations, increasing the risk of money-laundering and criminal activity.