David Cameron 'argued to water down transparency rules over trusts'


A move by David Cameron to water down the effect of EU transparency rules on trusts despite warnings it could create a loophole for tax dodgers has been defended by Downing Street.

The Financial Times revealed that the Prime Minister successfully argued in 2013 for trusts to be treated differently to companies in anti-money laundering rules.

It comes after the PM came under intense pressure over his family's tax arrangements following the Panama Papers data leak, which reportedly included details about his late father Ian's tax affairs.

In a letter to then European Council president Herman van Rompuy, Mr Cameron said it was "clearly important we recognise the important differences between companies and trusts".

He wrote: "This means that the solution for addressing the potential misuse of companies, such as central public registries, may well not be appropriate generally."

Dutch MEP Judith Sargentini, who led the European Parliament's work on the draft law, told the FT that the UK used privacy arguments to justify a different status and that she had seen it "as a danger and as a possible loophole".

But a Government spokesman said the stance was taken because of concerns that seeking to apply to true "beneficial" owner registers to trusts "would distract from action against those areas of most concern, such as shell companies".

"In practice, these further changes weren't achievable. In the subsequent negotiations, we were able to secure a sensible way forward which ensures that trusts which generate tax consequences have to report their ownership to HMRC."

He defended the Government's record on tackling tax evasion and avoidance - including legislation forcing British companies to disclose who owns and benefits from their activities which comes into force in June.

But shadow Treasury minister Richard Burgon said the story "completely undermines" claims the Government was determined to act on the issue.

"Another day and another story emerges which exposes what the Conservative Party really thinks in its heart of hearts about tackling tax avoidance," he said.

"The Prime Minister can't raise a finger to save our steel industry but at the drop of a hat he can personally intervene to undermine EU efforts to clamp down on tax avoidance.

"When things like this come out from the very top of the Conservative Party it completely undermines anything they have said previously on this major issue.

"It's time that they treated tax avoidance as the serious matter people across Britain know it is. And one way they can do that is to stop trying to block or undermine measures which would help to tackle it."

Among the leaked documents from Panama law firm Mossack Fonseca are details of a multimillion-pound offshore firm set up by Mr Cameron's late father Ian in the tax haven.

In the latest of a series of clarifications of the PM's tax arrangements, Number 10 insisted that neither the PM, his wife Samantha or their children would benefit in the future from offshore funds or trusts.

Labour is still demanding to know however whether they have benefited previously from the arrangement - which it is not suggested was in any way illegal.

The Prime Minister has championed the transparency agenda at a series of international summits, and legislation forcing British companies to disclose who owns and benefits from their activities comes into force in June.

But despite several years of pressure, the Crown Dependencies and Overseas Territories have proved reluctant to fully open up their business registers to UK law enforcement agencies.