The UK has been attracting quite a bit of scrutiny of tax havens lately, particularly in regards to its overseas territories. The British Virgin Islands was actually the most frequently exploited tax haven in the now-infamous Panama Papers, with well over half of all corporate entities named in the papers registered there. Historically, the UK government has relied on its overseas territories and their relatively opaque financial services industries as a way of reducing demands on the UK exchequer and of siphoning “cleaned” funds into London.
With an increasing emphasis on a global transparency agenda from a number of countries, the UK has been making efforts to improve financial transparency and crack down on tax havens, beginning with its own overseas territories. Moreover, when Theresa May became prime minister of the UK, she pledged to do more about tax havens. However, pundits argue that by calling a snap election in June, May could have very well killed tax haven reform.
In late April, UK parliament had the opportunity to crack down on financial secrecy in the UK’s overseas territories by passing the Criminal Finances Bill. The bill made it through the House of Commons and to the report stage in the House of Lords, with a number of key agencies – including Transparency International – offering input on the legislation. While the bill aims to increase the government’s ability to tackle corruption and money laundering, recover the proceeds of crime, and more effectively prevent terrorist financing, a main focus of the bill is cracking down on tax havens.
The good news is that the bill itself passed in Parliament. The House of Lords was supposed to vote on a specific amendment to the bill, introduced by Baroness Stern, which would have required public registers of beneficial ownership from all of the UK’s Overseas Territories. The bad news is that the aforementioned amendment didn’t even end up getting a vote.
Because May called a snap election in June, Parliament was dissolved on May 3, as parliament is dissolved by law 25 days before a general election takes place. That means that Parliament won’t vote on the amendment, and work will have to begin over again once a new Parliament is in place after the general elections. So while May might not have completely killed tax haven reform with her snap election, she has certainly made it harder for things to get through.