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11 Oct 2011

Should the government target tax havens?

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As research reveals all but two of the top 100 hundred firms on the London Stock Exchange use tax havens, Channel 4 News Business Correspondent Sarah Smith reports from the Channel Island of Jersey.

Household names like British Business, BP, HSBC, Prudential and British American Tobacco all use tax havens according to the charity Action Aid which says ministers can no longer afford to “turn a blind eye” to the use of such arrangements.

Its report says that 98 of the FTSE 100 companies use tax havens having a total of 8,492 offshore subsidiaries.

The advertising company WPP alone has 611 tax haven companies and the big four British banks have 1,649 offshore subsidiaries between them.

There is no suggestion that these companies are doing anything illegal.

ActionAid is calling on the Government to crack down on tax havens, saying they “can’t afford to turn a blind eye”.

Chris Jordan, tax justice expert at ActionAid, said: “ActionAid’s research showing the use of tax havens by Britain’s biggest companies raises serious questions they need to answer.

“Tax havens have a damaging impact on the UK exchequer, the stability of the international financial system, and vitally on the ability of developing countries to raise tax revenues which would lift them out of poverty and make them less dependent on aid.”

Read more: Filthy rich - the truth about tax havens
Should the government target tax havens like Jersey? (Getty)

ActionAid said there were 1,649 tax haven companies declared between the UK’s “big four” banks. The only two companies not to use tax havens were Fresnillo and Hargreaves Lansdown, ActionAid said.

Mr Jordan added: “When multinationals use tax havens to avoid paying their fair share, ordinary people in both poor and rich countries are left to pick up the bill.

“Spending on doctors, nurses and other essential services gets cut for those who need it most.

“Tax havens might provide the lure of financial secrecy and low tax rates for big companies, but at a time when all countries are desperate for revenues, the UK Government can’t afford to turn a blind eye.”

RBS, which is majority owned by the British taxpayer, has 30 subsidiaries in Jersey alone.

The bank told Channel 4 News it does substantial business in the Channel Islands and that it does adhere to the spirit, as well as the letter of the law when it comes to paying tax.

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