UK to resist full disclosure despite Panama Papers furore

UK chancellor of the exchequer George Osborne is bracing for a row with France and other European countries as he resists moves to make the ownership of trusts and foundations fully transparent, according to officials involved in Group of 20 talks in Washington.

France, working closely with Italy, Germany, and Spain, wants G20 nations to make it impossible for people to hide behind trusts or foundations to avoid paying tax or reporting assets.

Britain — which also resisted such a move in 2013 — is continuing to oppose full disclosure. A clash would come at a particularly politically sensitive time for UK prime minister David Cameron, who has been forced to justify his family’s tax affairs to parliament and the press after leaked documents showed his father based his fund offshore.

The Panama leaks — which led to Mr Cameron and Mr Osborne taking the unprecedented step of releasing their tax statements — will make it more awkward for Britain to claim it is at the centre of a push to improve tax transparency on a global level.

“Panama has breathed new life into the tax evasion crackdown, it’s accelerated the process,” French finance minister Michel Sapin said while en route to Washington for the talks.

“What has become clear is that we need complete cross-border transparency and international tools to deal with the problem.”

A UK official, who asked not to be named, suggested Britain would continue to resist France’s push for full disclosure of beneficiaries of trusts since they are a commonly used vehicle under British law — for example when making provisions for children.

The official argued a comprehensive crackdown would detract the focus from outfits set up specifically to avoid tax.

The UK government is in the centre of the debate about tax avoidance with a network of overseas territories like the Cayman Islands and the British Virgin Islands that offer shelter to the assets of the wealthy.

Mr Cameron said this week he aims to force those jurisdictions to disclose the real owners of companies registered there.

* Bloomberg