Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Mr Andrew Mitchell (Sutton Coldfield) (Con)
It is a pleasure to contribute to the debate. I congratulate the three Members who have made speeches so far, particularly the hon. Member for Kensington and Bayswater (Joe Powell); he represents a royal borough and I represent a royal town, but this is an issue on which there is huge cross-party agreement. It has already been set out why that agreement exists. We know that this dirty money comes from the drug trade, from the sex trade and from modern slavery. Alas, credible sources indicate that something like 40% of it comes through London, the overseas territories and the Crown dependencies.
Parliament has already decided what should happen. On 1 May 2018, the House added new clause 6 to the Sanctions and Anti-Money Laundering Bill, under which all overseas territories must implement open registers of beneficial ownership by the end of 2020. As the hon. Member for Cities of London and Westminster (Rachel Blake) said, it was meant to be 2019, but because of the hurricanes, Lady Hodge and I agreed when tabling the amendment that it would not be necessary to do it until the end of 2020.
Subsequently, the Foreign Office arbitrarily extended that figure by three years to 2023. On 4 March 2019, in a succession of points of order to the then Speaker, two former Chairs of the Public Accounts Committee—my now noble Friend Lady Hodge and my right hon. Friend the Member for Goole and Pocklington (David Davis) —and two former Secretaries of State for International Development, namely the right hon. Member for Leeds South (Hilary Benn) and myself, made it clear that that had been done by sleight of hand and that the open registers had to be implemented as soon as possible.
Outrageously, we now find that the will of Parliament has been flouted. The letter from the BVI, which I think was received last week, amounts in my view to a contempt of Parliament. The remedy lies with an Order in Council. The Order in Council, which was published on 14 December 2020, insists that the overseas territories must comply with the requirements of section 51 of the Sanctions and Anti-Money Laundering Act 2018.
The position is very clear. Unless at this summit the overseas territories—we are talking particularly about Cayman and the BVI—say that they will follow the will of Parliament, which is clearly set out in that section of the 2018 Act, the Government must impose an Order in Council in the way that has been agreed. Let us be clear: the Government set out in 2012 the constitutional position on using an Order in Council. None of us wants to do it, but that is what Parliament is now pushed to do. The Government said:
“As a matter of constitutional law, the UK Parliament has unlimited power to legislate for the Territories.”
The overseas territories themselves recognise that they gain hugely from their relationship with the United Kingdom. If they want to travel under our flag—if they want to have the privilege under our monarch—they must accept our values as well. This has gone on far too long. I read that they were suggesting the Foreign Secretary was working to impose these orders in a colonialist way. I cannot think of any other Member of Parliament of whom that is less likely to be true than the current Foreign Secretary.
The brilliant officials in the Foreign Office, who are second to no one in my admiration, have been too willing to keep the peace between the overseas territories and London. They must now ensure that the open registers of beneficial ownership are implemented forthwith, in accordance with the will of Parliament. I very much hope that that will be the result of the summit to which the hon. Member for Kensington and Bayswater referred.
Mark Garnier (Wyre Forest) (Con)
It is a great pleasure to serve under your leadership, Mr Turner, as it is to respond to the debate called for by the hon. Member for Kensington and Bayswater (Joe Powell). This will be one of those debates where there is ferocious agreement in all parts of the House. Before I get into the substance of my speech, it is worth mentioning that there is a legitimate role for tax havens. The City of London will certainly have investment funds located in tax havens in order to have tax neutrality for investors into those funds. Those investors have to pay their domestic tax, but they do not want to pay tax on the funds as they go forward.
It is also worth mentioning that, in some cases, small islands will look to see if they can grow their economies by providing financial services. Again, if they are doing that in a legitimate way, and one that fits with the wishes of the world, there is nothing wrong with that. But that is the important point: it is incredibly important that what they are doing is seen to be legitimate, right and fair for everybody else.
Turning to the substance of the debate, as hon. Members have rightly pointed out, there is still much work to be done on tax transparency. As part of the Sanctions and Anti-Money Laundering Act 2018, overseas territories were required to introduce public registers of beneficial ownership. In 2020, the previous Government set out in a written ministerial statement the expectation that the territories would implement registers by the end of 2023.
Intense discussions took place with overseas territories over the implications of the ruling by the Court of Justice of the European Union that publicly accessible registers were contrary to the EU charter of fundamental rights. Despite some overseas territories’ raising concerns over the ruling, which does not apply to the UK, the previous Government were satisfied with the lawfulness of the public register. I am sure the Minister will confirm that today. However, the impact of the EU ruling has led to delays in the overseas territories implementing the public register. The previous Government made it clear that they expected progress in 2024, yet, as we would all agree, progress remains far too slow.
Too many jurisdictions under our responsibility continue to allow opaque corporate structures that enable illicit finance to flow unchecked. That is particularly concerning in the light of recent geopolitical developments, including the increase in money from sanctioned countries—Russia —being laundered through offshore entities. I am looking forward to the Exchequer Secretary updating us on what progress has followed the November joint ministerial council for overseas territories. The Opposition welcome the communiqué, which reaffirmed the Government’s expectation that overseas territories should provide public access to beneficial ownership registers. It is right to commend Gibraltar and Montserrat, which have implemented public registers, and the Falkland Islands and St Helena, which have pledged to do so by April 2025. It is worth adding that, while not directly legislated for by the UK, the Crown dependencies—Jersey, Guernsey and the Isle of Man—have made commitments to greater transparency, too.
Mark Garnier
I hope my right hon. Friend will not mind if I do not, because I am conscious that we have very little time.
It remains a concern that major financial centres such as the British Virgin Islands, Bermuda and the Cayman Islands remain resistant to these measures. Will the Exchequer Secretary provide an update on what pressure the UK Government are placing on those overseas territories that are not fully complying with the Sanctions and Anti-Money Laundering Act 2018?
The UK Parliament has sovereign powers over the overseas territories. Therefore, we cannot allow any jurisdiction to water down these proposals. The previous Government allowed for an interim step of a legitimate interest model, which would allow access to beneficial ownership information by members of the public with a legitimate interest in accessing it, including media and civil society organisations involved in the fight against illicit finance and money laundering. Even if that might be a stepping-stone for some overseas territories, I hope the Minister will confirm that it should not dilute efforts to create a public register.
Overseas territories must align with the UK’s own standards and comply with UK law. What is the Government’s plan if further delays occur? Will there be consequences for non-compliance? This Government and the previous Government have repeatedly stated that tackling illicit finance is a priority—we agree on that point. The current Foreign Secretary has declared:
“The golden age of money laundering is over”.
I am sure the Minister would agree that our overseas territories and Crown dependencies must not become the weak link in the fight against money laundering and corruption.
The Exchequer Secretary to the Treasury (James Murray)
Thank you for that reminder about the timing, Mr Turner. I congratulate my hon. Friend the Member for Kensington and Bayswater (Joe Powell) on securing this debate, and Members on all sides of the House on their contributions, including the hon. Member for frozen asset—as she styled herself in her contribution—my hon. Friend the Member for Cities of London and Westminster (Rachel Blake).
I know Members have questions that they have raised about the implementation of specific tax transparency measures in the overseas territories, and our continuing collaboration with them. I will turn to those in a moment, but I will briefly set out the broader constitutional context of the overseas territories and their role in international tax.
We continue to support the overseas territories to build vibrant and sustainable economies, including through encouraging greater links to the UK economy. The overseas territories are an integral part of the British family. The inhabited overseas territories are self-governing jurisdictions with democratically elected Governments and responsibility for fiscal matters. They have responsibility for setting their own policies, including determining their own tax rates in line with international standards. They are also committed to upholding international tax standards, and the UK Government are actively working with them to ensure they meet their commitments.
Domestically, the UK has implemented a range of policies to prevent shifting of profits to low-tax jurisdictions, including controlled foreign corporation rules, anti-hybrid rules, and corporate interest restriction rules. All overseas territories with an international financial centre have joined the UK in becoming members of the OECD/G20 inclusive framework on base erosion and profit shifting. That signals their ongoing commitment to implementing the BEPS minimum standards.
All overseas territories with financial centres have also committed to the global forum’s exchange of information and request standard, and to implementing the OECD’s common reporting standard and cryptoasset reporting framework for the automatic exchange of information for tax purposes. Treasury officials regularly engage with counterparts in Crown dependencies and overseas territories to exchange best practice and technical expertise in adhering to international tax standards.
Where overseas territories need more in-depth support, HMRC works with them to build capacity and to comply with international standards. Support from HMRC has in recent years helped Montserrat and Turks and Caicos to be found fully compliant with the EU’s code of conduct group.
Of course, as other hon. Members have mentioned, the Government are also determined to close the tax gap in the UK public finances, and tackling offshore tax non-compliance is a key part of that. HMRC can access relevant information from overseas territories through the automatic exchange of information, and exchange on request, for tax investigations.
At the autumn Budget, the Government announced a record package to close the tax gap. That included our commitment to growing HMRC’s compliance workforce by 5,000 people over the next five years. As part of that, we are expanding HMRC’s international compliance work, supported by a campaign of targeted external recruitment of senior tax experts. Before the end of this financial year, HMRC expects to have recruited more than 50 experienced international tax professionals through that exercise, which will more than double the number achieved in the previous year. Tackling illicit finance in the UK and its overseas territories and Crown dependencies is a priority for the Government.
Mr Mitchell
Can the Minister provide an undertaking that if the overseas territories, and indeed the Crown dependencies, do not co-operate with what Parliament has set out—the Order in Council published in draft already—the Government will exercise their rights on behalf of Parliament and issue this Order in Council?
James Murray
I had a feeling the right hon. Gentleman was going to ask a question along those lines. I will answer it in a moment.
I welcome the commitment made by the leaders of the overseas territories in November 2024, which has been referred to by hon. Members, to support the Foreign Secretary’s campaign against illicit finance. As part of that commitment, boosting corporate transparency through registers of beneficial ownership is a core aim in helping to tackle money laundering and tax and sanctions evasion and in helping to foster an open and trusted business environment. Fully public registers of beneficial ownership are already in place in the UK, Gibraltar and Montserrat.
My hon. Friend the Member for Kensington and Bayswater asked about the register of overseas entities and whether trust-owned property would be included on those registers. If an entity from an overseas territory owns property in the UK, they would fall under the requirements and would need to declare their beneficial owners. That includes beneficial owners associated with a trust. The register of overseas entities is also being updated this year to grant, on application, access to trust information that is currently restricted from the public.
At the joint ministerial council in November 2024, the Government confirmed their expectation that fully public registers of beneficial ownership would be implemented by overseas territories. The Falkland Islands and St Helena committed to implement those by April 2025. Bermuda, the British Virgin Islands, the Cayman Islands, Anguilla and the Turks and Caicos Islands committed to implement registers of beneficial ownership accessible to those with a legitimate interest by June 2025 at the latest. This approach offers the maximum possible degree of access and transparency while retaining the necessary safeguards to protect the right to privacy in line with respective constitutions.
Progress towards delivering on these commitments is under way. The UK Government have been clear to the elected leaders of the overseas territories that we expect registers to be delivered by the deadline and in line with the standard agreed at the joint ministerial council. UK Government officials continue to work in partnership with officials in the overseas territories to support the implementation of these registers, and last month they wrote with further clarifications on the minimum requirements for registers of beneficial ownership. The Government are continually reviewing this issue and will consider carefully what steps to take if registers are not delivered on time and to an acceptable standard. We are aware of the consultation document released by the British Virgin Islands and continue to engage with BVI to improve its proposal, in line with the agreement made at the joint ministerial council.
The UK, the Crown dependencies and the overseas territories stand united in condemning the Russian Government’s aggression. We have been working in lockstep to enforce UK sanctions, which hon. Members have mentioned, including by freezing assets across the Crown dependencies and overseas territories. That has helped to implement the UK Government’s sanctions regime, which, to date, has amounted to $9 billion-worth of assets. To support this, the Office of Financial Sanctions Implementation has provided significant technical assistance to build capacity in the Crown dependencies and overseas territories.
As we have heard in this debate, the push for tax transparency in the overseas territories generates strong views. I recognise that there have been instances in which high net worth individuals and multinational entities have sought to hide their assets and profits in the overseas territories. The overseas territories are working to implement international tax transparency standards and work closely with us to identify tax abuse, to combat money laundering and terrorist financing, and to enforce UK financial sanctions. We must continue to work towards greater tax transparency in the UK, the overseas territories and globally. That includes greater transparency regarding company ownership, as well as the ownership of assets such as cryptoassets and real estate, to ensure the public can see who the beneficial owners are. I thank you again, Mr Turner, I thank all hon. Members who have spoken in the debate and I thank my hon. Friend the Member for Kensington and Bayswater in particular for securing this debate.
Joe Powell
I thank the Exchequer Secretary to the Treasury for his response, and I thank all hon. Members who have spoken for their contributions. This has been a productive and constructive debate. There has been a lot of agreement on the problem. We heard the tax case very strongly, particularly from the hon. Members for Strangford (Jim Shannon) and Carshalton and Wallington (Bobby Dean). We heard the housing and communities case, particularly from my hon. Friend the Member for Cities of London and Westminster (Rachel Blake). We heard the economic growth case from my hon. Friend the Member for Bolton West (Phil Brickell), the poverty and inequality case from my hon. Friend the Member for Bournemouth East (Tom Hayes) and the constitutional case from the right hon. Member for Sutton Coldfield (Mr Mitchell), which took us through the history over the past decade of missed deadlines and opportunities for the action we are talking about to be taken.
I hesitate to say that this will be the last debate in this place on this topic—I suspect it will not be—but I welcome the Exchequer Secretary’s commitment. I think he was being quite polite when he said that the Government wished to see an improvement to the BVI’s proposal. The BVI needs to go back to the drawing board and bring back a proposal fully in line with the principles that Parliament concluded were the best action for this problem, which is full public registries of beneficial ownership.
In final closing, I thank the spokespersons for the Liberal Democrats and the Conservatives, the hon. Members for Lewes (James MacCleary) and for Wyre Forest (Mark Garnier), respectively, for their constructive contributions. I agree that there may be some legitimate uses of offshore tax centres, in particular for companies in multiple jurisdictions, but the heart of the problem is that the BVI, the Caymans, Bermuda and others are still far too susceptible to very serious illicit crime.
If there is one message that I would like all hon. Members to take home it is that this is not an abstract problem. It is not something just to do with billions and trillions in the financial system. It is about constituents who are being chased by HMRC who feel the double standards; it is about our housing crisis and empty properties; it is about our sanctions, their enforcement, and support for autocrats such as Putin, and it is about our public finances.
We have a strong case for why we need to act, and I reiterate my thanks to the Minister for his outlining of the next steps. The June deadline to see progress from the overseas territories is imminent, but as the right hon. Member for Sutton Coldfield said, this area is littered with missed deadlines. We need a proper deterrent from the British Government to say what will happen if the territories pass those deadlines and no action has been taken.
Mr Mitchell
We have another three minutes, so I am keen to help out.
To be clear, we are talking here about dirty money and the source of this money—money stolen from Africa and from Africans. The baddies have all the best tunes, and they have the money to get their way, so the forces of law and order are always fighting to catch up. It is important to emphasise the open registers. The mist fell from all our eyes when, thanks to the BBC and The Guardian newspaper, the Paradise and Panama papers were published. They showed that, without this open register approach, we cannot join up the dots to see what those clever villains are doing, catch them, trap the money and hopefully return it. The hon. Gentleman and I agree completely, but I hope that we can carry the Government with us.
Joe Powell
I thank my co-chair of the all-party parliamentary group on anti-corruption and responsible tax, where we talk about this a lot.
Exhibit A is the UK public register of company ownership—when introduced, we were told that there would be all sorts of capital flight and that people would not come here to buy properties and invest, but that has simply not been the case. The register has now been in existence for several years. In fact, many of the countries that were the source of corruption and dirty money are now implementing public registries: Nigeria, Indonesia and Kenya, to name but a few.
We know action is possible—Gibraltar and others among the overseas territories have already done it—and it is now incumbent on the others to follow suit. I implore the Government to keep the pressure on so that we do not have to come back too many more times to debates such as this to re-analyse the same problem that we all agree is there, when we know the policy solution is within our grasp.
Question put and agreed to.
Resolved,
That this House has considered tax transparency in the Overseas Territories.