Overseas Territories: Tax Transparency

James Murray Excerpts

Wednesday 5th February 2025 Westminster Hall

[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.