British firms attacked for routine use of tax havens

Charity urges politicians to match rhetoric with action to stop an 'epidemic' of tax dodging

Andrew Grice
Tuesday 11 October 2011 00:00 BST

Ninety-eight of the FTSE 100 companies use tax havens, including the state-backed Royal Bank of Scotland and Lloyds Banking Group, according to a report published today.

ActionAid, the international development charity, said the use of offshore companies had reached "epidemic levels" and demanded that politicians live up to their rhetoric about closing tax loopholes. They said tax dodging by multinational companies in the world's poorest countries kept them dependent on aid from countries such as Britain.

The charity, which has analysed information requested by Companies House, found that the 100 largest groups registered on the London Stock Exchange have 34,216 subsidiaries, joint ventures and associates – a quarter of which are located in tax havens. Of the FTSE 100, only Fresnillo and Hargreaves Lansdowne do not declare any tax haven companies. The advertising group WPP has the most with 611, but the banking sector makes the heaviest use of these firms. The big four high-street banks have 1,649 in total.

Chris Jordan, a tax justice expert at ActionAid, said the research also showed the need for more coherence in government policy. "Helping companies to avoid tax payments to the same governments that we are supporting through overseas aid is a false economy for British taxpayers."

ActionAid also criticised the Government for considering reforms to controlled foreign companies it said would give an £840m UK tax break to firms using tax havens, and make it easier for them to dodge taxes in developing countries. But last night the Treasury challenged that interpretation of its proposals.

A Treasury spokesman said last night: "The Government has demonstrated a clear commitment to tackling all forms of tax avoidance and evasion. Tax avoidance in developing countries deprives governments of the vital income needed to build and maintain their public services. The best way to prevent this is by helping these countries develop robust and stable tax systems which enable them to collect the tax they are owed. The UK delivers targeted and effective support to make this happen."

The charity admitted its report, Addicted to tax havens: The secret life of the FTSE 100, does not in itself prove tax avoidance. But it argued that the scale of multinationals' operations in countries that provide tax advantages showed the need for greater transparency. It called on the G20 summit in Cannes next month to force companies to break down their accounts on a country-by-country basis.

The banks are by far the biggest users of the Cayman Islands, where Barclays alone has 174 companies. There are over 600 FTSE 100 companies in Jersey, more than in the whole of China; 400 in the Cayman Islands and 300 in Luxembourg.

The oil giants BP and Shell have almost 1,000 tax haven companies between them, while British American Tobacco has 200 and UK-only retailers such as Morrisons and Sainsbury's also feature on the list.

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