Research Shows That a Third of UK Firms Receiving Emergency Loans Due to the Pandemic Are Connected to Tax Havens

The coronavirus has brought some of the controversy regarding tax havens back into the spotlight, with many critics of tax havens disapproving of the fact that companies that avoid paying taxes have asked for emergency loans or other forms of relief. Recent research indicates that a third of the firms within the United Kingdom that received or are receiving emergency loans from the pandemic have connections with tax havens.

The Report

The report comes from an analysis conducted by TaxWatch, a think tank that focuses on investigative efforts and has been vocally critical of tax havens.

According to this report, the Bank of England has provided 53 businesses with coronavirus loans. Of those businesses, 14 are either entirely based on tax havens or have substantial ownership by a resident of a tax haven. These 14 businesses have received loans totaling over £5 billion.

These loans are part of the scheme from the Bank of England called the coronavirus corporate financing facility (CCFF). The loan is designed to assist some of the largest companies with their credit ratings.

More Details

According to TaxWatch, one company receiving a CCFF loan is connected to a tax haven and is currently undergoing an investigation conducted by the Serious Fraud Office. Another of the companies receiving the emergency loan is presently nine months past due on filing its accounts in the United Kingdom. Neither of these companies is directly named in the report.

Specific Examples

The report from TaxWatch mentions specific companies that have received emergency loans from the Bank of England yet are partially connected to tax havens.

British Airways, for example, received £300 million in emergency support. The parent company of British Airways is based in the UK and Spain, but it has financial links that connect it to Jersey, a known tax haven.

Chanel was also named. This luxury brand received £600 from the CCFF. The loan was obtained by Chanel Limited, which has a parent company that is based on the Cayman Islands, another known tax haven. Additionally, TaxWatch pointed out that the Wertheimer brothers, who are billionaires, have a controlling interest in the company.

The report also points to JCB, which makes diggers. The parent company of JCB is in the Netherlands, which is widely considered a tax haven despite its location within the European Union. Like Chanel, JCB received £600 million in emergency loans.

Comments by TaxWatch

In addition to conducting the investigation and releasing the report, TaxWatch has also spoken out about the issue and released additional explanations. The United Kingdom director of TaxWatch, George Turner, indicated that the fact that these companies are receiving loans suggests that the government does not have “any meaningful conditions” surrounding its support for business.

Turner specifically points to the fact that taxpayer money is being used for these loans, including companies without proper account filings, those that are part of a tax avoidance structure, and those under investigation for corruption and bribery.

Turner additionally pointed out that the list published by the Bank of England that TaxWatch used for its investigation does not reveal the entire list of businesses that are receiving this government support. Given the findings of the think tank regarding those on the published list, Turner strongly encourages the government to release the full list.

Comments by the Government

In response, a spokesman for the Treasury reminded listeners that the government used unprecedented speed in delivering these loans to support the economy and jobs. The spokesman argued that the CCFF directly protected hundreds of thousands of various jobs. It also supports the cash flows of some of the largest companies, enabling them to support their suppliers. According to the spokesman, the UK is still involved in tackling global tax avoidance via robust measures.


Recent posts

4 Consequences of US Tax Reform

Over the course of the past several weeks, President Trump has consistently called for tax reform, and the Senate Finance Committee has scheduled hearings on both business and individual tax reform.

More >>>