The Prime Minister is under pressure after admitting that he had a stake in an offshore investment fund set up by his late father, despite being an outspoken critic of tax avoidance.
While some of his political opponents are calling for his resignation, David Cameron insists his assets were “subject to all the UK taxes in all the normal way”.
Here’s everything we know, and what we still don’t know.
What did Mr Cameron do?
In an interview with ITV News on Thursday, Mr Cameron admitted he owned 5,000 units in a Panama-based fund set up by his stockbroker father Ian Cameron.
The Prime Minister said he and his wife Samantha held the shares from 1997 to January 2010, when they sold them for £31,000, making a £19,000 profit.
Mr Cameron said he paid no capital gains tax on the sale because the profit came in under the personal allowance at the time. But he paid full UK income tax on dividends earned from the investment.
The fund, Blairmore Holdings Inc, was not a “trust” set up to shield the Cameron family fortune from tax.
It was an investment company set up in the early 1980s, which allowed investors from around the world to pool their resources and invest money in various assets chosen by fund managers.
Was the fund set up to dodge tax?
The Prime Minister says no, calling this a “fundamental misconception”.
But a Blairmore prospectus from 2006 makes it clear that not paying UK corporation or income tax was a fundamental aim of the fund managers.
The prospectus said: “The directors intend that the affairs of the fund should be managed and conducted so that it does not become resident in the United Kingdom for United Kingdom taxation purposes.”
The document also makes it clear that UK investors would have to pay tax on earnings from their holding in the fund, and that the fund was registered properly with the British tax authorities.
So while the fund would not be taxed as a company, individual investors like David Cameron could expect to pay personal taxes themselves.
A number of questions remain around the ethics of this arrangement.
Blairmore Holdings was incorporated in Panama and ostensibly run by staff in the Bahamas.
But the former tax inspector and Private Eye journalist Richard Brooks says documents relating to Blairmore in the leaked Panama Papers suggest key business decisions were actually being made in the UK in the early 200s, something that would have prompted “very serious questions” from HMRC.
He said: “It is hard to see how the company was not managed and controlled, and therefore tax resident, in the UK at the time.”
The leaked papers, as reported by the Guardian newspaper and other global news organisations, suggest Blairmore made use of “bearer shares” – certificates of ownership that do not carry the name of an owner and can be cashed in by any bearer.
The anonymity and lack of a paper trail made bearer shares very popular with criminals, and they have banned by many countries including Britain and the US.
While there was nothing unusual in Blairmore Holdings Inc using the shares, it raises the question of whether everyone who invested in the fund was as honest as David Cameron in declaring their assets and paying tax.
Did the Prime Minister break parliamentary rules?
He chose not to declare his ownership of the Blairmore shares in the register of financial interests before he sold them in 2010, but this was not a breach of House of Commons rules at the time.
The 2009 code of conduct stated that only shares worth more than £64,776 had to be registered, and that holdings in a “collective investment vehicle” were “not generally registrable”.
So did he do anything wrong?
On the one hand, Mr Cameron has repeatedly criticised legal tax avoidance as immoral, while having a history of holding shares in an offshore fund that intentionally avoided paying UK company taxes.
Several tax lawyers have come forward to say that the Blairmore offshore set-up is incredibly common and completely legal, with one saying “millions” of people hold similar investments through pension funds.
And there is no evidence that the Prime Minister paid any less tax than the law demanded.
Mr Cameron is also coming under fire for taking several days to be completely candid about his tax affairs following the Panama papers revelations.
Is this the only thing that links him to the offshore world?
No. Channel 4 News reported last year that Ian Cameron had assets in Jersey when he died, including at least 6,000 shares in a different investment vehicle called Close International Equity Growth Fund.
Under Jersey law, the full value of the assets held on the island do not have to be made public. Legal experts told Channel 4 News any assets held by Mr Cameron senior in Jersey would go to his wife Mary (both are pictured above).
David Cameron confirmed that he received an inheritance of £300,000 from his father after his death, saying: “I obviously can’t point to every source of every bit of the money and dad’s not around for me to ask the questions now.”
The existence of assets in Jersey raised the question of Mr Cameron benefiting from offshore assets in the future, but Downing Street said in a statement this week: “There are no offshore trusts or funds from which the prime minister, Mrs Cameron or their children will benefit in future.”
Mr Cameron himself repeated that promise, saying: “In the future I am not benefiting from any Cameron family trusts.”