POLITICS

Panama Papers Show David Cameron's Father 'Avoided Paying Tax'

11 million documents from Panamanian law firm leaked to 107 media organisations

04/04/2016 13:46
Johnny Green/PA Archive

David Cameron's father Ian ran an offshore investment fund that avoided ever paying tax in the United Kingdom, according to the so-called Panama Papers.

The Guardian reported on Monday afternoon that Ian Cameron's Blairmore Holdings Inc company, set up in the 1980s, managed tens of millions of pounds for the wealthy but has not ever paid tax on UK profits.

Asked whether the Cameron family still had money in a Panama fund, the prime minister's official spokesman said it was "a private matter".

Ian Cameron died in 2010 and left £2.74m in his will - of which the prime minister received £300,000.

There is no suggestion that the avoidance arrangement or others exposed by the leak were anything but entirely legal.

The prime minister has been told he must take "real action" to crack down on offshore tax havens, opposition figures have demanded after a massive data leak exposed the scale of efforts by the rich and powerful to hide assets.

Six peers, three Tory ex-MPs and "dozens" of UK political party donors - whose names have not yet been released - are reported to be among scores of global politicians including national leaders identified as holders of offshore assets.

Their identities are said to be in more than 11 million documents from the Panamanian law firm Mossack Fonseca passed to 107 media organisations across the globe, including The Guardian and BBC's Panorama.

HM Revenue and Customs has approached the International Consortium of Investigative Journalists (ICIJ) for access to the data and said it would "act on it swiftly and appropriately".

Labour shadow chancellor John McDonnell said: "Cameron promised and has failed to end tax secrecy and crack down on 'morally unacceptable' offshore schemes; real action is now needed."

WHAT ARE OFFSHORE ACCOUNTS?

Offshore bank accounts and other financial dealings in another country can be used to evade regulatory oversight or tax obligations. Companies or individuals often use shell companies, initially incorporated without significant assets or operations, to disguise ownership or other information about the funds involved.

WHERE ARE MOST OFFSHORE ACCOUNTS?

Panama, the Cayman Islands and Bermuda are among more than a dozen small, low-tax locations that specialize in handling business services and investments of non-resident companies.

LEGITIMATE USES FOR OFFSHORE ACCOUNTS:

Companies or trusts can be set up in offshore locations for legitimate uses such as business finance, mergers and acquisitions and estate or tax planning, according to the global money laundering watchdog, the Financial Action Task Force.

ILLICIT USES OF OFFSHORE ACCOUNTS:

Shell companies and other entities can be misused by terrorists and others involved in international and financial crimes to conceal sources of funds and ownership. The ICIJ says the files from Mossack Fonseca include information on 214,488 offshore entities linked to 14,153 clients in 200 countries and territories.

EFFORTS TO CRACK DOWN ON FINANCIAL HAVENS:

The Financial Action Task Force and other regulatory agencies publish assessments identifying weaknesses in enforcement of anti-money laundering and counter-terrorism financing efforts of specific countries and territories. Financial and legal professionals get training on how to spot potential violations, since in some cases lawyers and bankers are unaware they are handling illicit transactions. The EU has stepped up efforts to crack down on tax avoidance by multinational corporations.

PAST SCANDALS OVER OFFSHORE ACCOUNTS:

Banking secrecy laws can obscure offshore financial dealings. But the disclosure of other leaked documents by the ICIJ and other organizations in late 2014 drew attention to sweet tax deals offered by the tiny European country of Luxembourg to multinational companies and ultra-wealthy individuals. In the 1980s, the Bank of Credit and Commerce International, an international bank founded by a Pakistani financier, was implicated in wide-scale money laundering and other illegal financial dealings.

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