MercoPress. South Atlantic News Agency

Offshore tax havens skim UK treasury of ? 4 billion says TUC

United Kingdom is losing at least ?4 billion a year through wealthy residents holding their money in offshore tax havens, claims a research from the TUC (Trade unions congress).

Jersey is the most popular tax haven with UK residents, followed by Switzerland, the Isle of Man and Guernsey, according to TUC. Under the EU Savings Tax Directive, UK residents who hold offshore bank accounts in tax havens can either declare their interest to HM Revenue & Customs, or opt to have a 15% tax withheld from their interest payments by the country in which they hold the account. Three-quarters of this withheld tax is then paid to the UK Government, with the rest retained by the Government of the tax haven, giving an effective UK tax rate on offshore accounts of 11.25%, rather than the 40% which would have been paid if the money was held in the UK. The TUC, which analysed figures from a recent parliamentary answer, said during the past three years ?319 million of tax was lost on a total income from offshore accounts of ?1.1 billion for their holders. But the group said the figures were a "serious under-estimate" of the total tax lost to the UK through tax havens. It said conservative estimates suggested that more than five times more money was held in offshore accounts by companies or trusts set up for the super-rich which are not governed by the directive. At the same time, it said evidence suggests that only 18% of assets held off-shore are held as cash. Overall, the TUC estimates that the total amount of tax lost to the UK last year through holding assets offshore was at least ?4 billion. TUC General Secretary Brendan Barber said: "The mechanisms of tax avoidance are always hard to understand, but this is a very simple story. If the super-rich held their money and assets in the UK they would contribute at least ?4 billion pounds extra. "This would be enough for the Government to meet its target to halve child poverty by 2010. It would also mean that instead of being squirreled away in tax havens, it was being spent in the real economy here helping us fight recession. "With the tax take falling because of the recession, there can be no better time to get tough with the super-rich, so many of whom did so much to throw the world into recession." The TUC is calling for the EU Savings Tax Directive to be reformed to enhance information exchange between tax havens and the UK and other EU Governments. It also wants the accounts and trusts registered with tax havens to be placed on public record, and are calling for the tax withholding option to be cancelled.