Lords call for public ownership registers in Overseas Territories
On 26 February the ‘tax haven status’ of UK overseas territories was discussed in the House of Lords with some peers arguing that public registers of beneficial ownership need to be introduced by these territories with greater urgency.
Baroness Chakrabarti (Lab) asked about the government's assessment of the economic benefits to the UK stemming from the ‘tax haven’ status of the overseas territories.
The Treasury minister in the Lords, Baroness Vere of Norbiton, responded that the UK has not made a recent quantitative assessment, however it continues to ‘support’ the territories to build “vibrant and sustainable economies”. She added that the overseas territories are an ‘integral’ part of the British family and their elected governments are responsible for their fiscal matters including tax.
Baroness Chakrabarti pointed out that last year the UN General Assembly voted in favour of a new framework convention on tax justice, however the UK voted against it. She said that negotiations for a treaty to deal with tax avoidance and evasion are in progress and enquired if the government would engage now.
Baroness Vere did not respond directly on the UN negotiations, focusing her reply on the ‘enormous amount’ of work being carried out by the OECD and the inclusive framework.
Baroness Kramer (Lib Dem) also expressed concern about the lack of public registers of beneficial ownership, highlighting that the government ‘guaranteed’ to introduce this framework “for all overseas territories by the end of last year.” She asked for an update on this matter and asked: “do the government recognise their crucial role in stemming corruption?”
The minister stressed that she recognised the government's role in stemming corruption and noted that the government works “very closely with the overseas territories on all sorts of issues when it comes to illicit finance”.
A Conservative peer, Lord Naseby, defended the Cayman Islands, with which he has family connections, as “a well-regulated jurisdiction with a tax-neutral framework”. The minister replied that the Cayman Islands “is doing well, but I think it can do better. For example, the beneficial ownership register that the Cayman Islands is planning to put in place will still have a legitimate interest access filter.” The UK government would like to see fully open registers.
A Labour peer, Lord Collins of Highbury, also questioned the minister about the timescale for registers of beneficial ownership, saying that the British Virgin Islands and others are talking about a five-year timetable. He wondered what the government was doing to speed up this process. The minister said that while the UK could support these territories, their elected governments are responsible for their domestic affairs. She continued that the BVI is looking to put a framework in place no later than quarter 2 of 2025.
Lord Watts (Lab) raised concern about the high tax burden for the British people and asked the minister why “the richest people in the world and this country are avoiding tax altogether”. The minister responded that “overseas territories are non-sovereign jurisdictions” and they set their tax legislation within their legal structure.
Lord Hannan (Con) asked whether the Treasury has carried out “any assessment of how much higher tax rates would be in the rest of the world if there were not competition from these lower-tax jurisdictions to keep us in check?” It has not, said the minister.
Lord Sikka (Lab) accused the government of being ‘relaxed’ about offshore avoidance. Baroness Vere defended the government’s approach and stated that “all tax avoidance needs to be stamped out”. She did not respond to a second strand of Lord Sikka’s question, asking when we might see the promised (and overdue) estimate of the offshore tax gap.
Lord Hamilton of Epsom (Con) stressed the potential burden on the British taxpayers “[i]f some of the overseas territories ceased to be tax havens”. The minister responded that the government encourage the overseas territories to develop sustainable and successful economies. The OTs are responsible for setting their own tax rates, but these rates will be underpinned by pillar 2 which would be “implemented via domestic rules across all overseas territories where it is relevant”.
You can read the full debate here