I was recently privileged to join members of the European Parliament’s Delegation to the UK to gather evidence for our investigatory Committee into the Panama Papers scandal. The idea behind the visit was to meet with significant figures and organisations involved in fighting tax avoidance and evasion, and money laundering, to see the strengths and faults in current efforts.
During the course of the visit we met with representatives of HM Revenue and Customs (HMRC), the National Crime Agency (NCA), NGOs and charities. Our Committee had invited representatives of the UK Government to speak with us about this very serious problem. Instead, we were delivered with an undated letter on the morning of our visit declining the invitation. In contrast, the Labour MPs Meg Hillier, as the Chair of the Westminster Parliament's Public Accounts Committee, and Caroline Flint, one of its most active members, did come along and share their experience.
One of the core proposals I’ve been calling for in recent years has been for a public register of beneficial owners of companies. Quite often the owners of companies will hide behind sham directors and owners. It was reassuring to see both HMRC and the NCA clarify that such public lists would help the fight against tax avoidance and money laundering. This is because journalists, charities and NGOs can help hold multinational companies to account when these registers are widely available. They also help ensure a level playing field for small businesses, who can better understand who their competitors actually are.
Less reassuringly, were told that the sheer volume of Suspicious Activity Reports (SARs) sent into British authorities by banks, accountants and lawyers is staggering. I calculated that to properly investigate them all would require each member of staff in the relevant unit to assess 13 cases per day, every day- a monumental task, not least given the trend over time to reduce HMRC's headcount (even if staff maintained they currently had sufficient resources).
Our meetings in London also indicated how the effects of tax havens can be felt close to home. Transparency International highlighted that more than 40,000 London properties are registered off-shore, making it difficult for UK authorities to know who truly owns them and further pushing up the price of housing in London.
I asked the UK authorities if they felt the new ‘Criminal Finances Bill’, which seeks to make it illegal for tax middle-men (intermediaries) to advise on illicit activities or facilitate tax evasion, would really have an impact. Although both the HMRC and NCA highlighted its potential, our meetings with solicitors, accountants and others suggested it may have limited impact, with little mention made of the new legislation.
Indeed, many of my MEP colleagues expressed concern at the lack of means to tackle intermediaries in the UK. It is incredible that, for example, the Solicitors Regulatory Authority can only fine legal practices a maximum of £2000, given the amount of money some lawyers may be helping to remove from the UK Exchequer!
The information we have gathered over the course of the delegation was invaluable, but it was incredibly frustrating that the only representatives of the UK to attend the event were opposition MPs. In the government's absence, there was a limit to how open officials could be, particularly those from HMRC and the NCA.
The UK Government has a well recorded history of claiming to be tough on tax avoidance and evasion to the public, but fighting tooth and nail to prevent progress when hidden away from the public eye. The letter they provided our delegation will do little to prove this reputation incorrect.