Darling on the offensive against UK 'tax haven' claims

In an exclusive interview with Accountancy Age the new chancellor has said claims that the UK was a tax shelter were 'seriously flawed'.

‘Firstly the IMF does not categorise the UK as a tax haven. This was suggested by some organisations on the back of some seriously flawed experimental methodology for identifying tax havens. The government is committed to ensuring that everyone pays their fair share of tax,’ he said.

Darling’s robust defence of UK tax rules comes amid an onslaught against the system from unions and tax campaigners, who have argued that the non-domiciled rules and light company incorporation regime give the UK the classic characteristics of a tax haven.

A recent working paper, commissioned by the IMF, but not necessarily a reflection of its official view, argued that the UK should be classified in the same category as offshore financial centres such as the Isle of Man and Jersey.

The consultation on the taxation of foreign profits, meanwhile, has seen some advisers predict that the UK will become more attractive to international companies than Luxembourg, prompting further outrage from critics.

‘The UK behaves like a tax haven in that it refuses to co-operate with other regions on tax and does not take action on the tax haven jurisdictions that it is responsible for,’ said tax activist Richard Murphy.

The UK’s controversial non-domiciled rules, which exempt foreigners from paying tax on foreign income, have fuelled further claims of inequality and unfairness in UK tax affairs.

Darling would not commit to reforming or scrapping the rules, saying that the matter was ‘complex’ and would only be addressed when a Treasury review of the regime was completed.

Peter Cussons, international tax partner at PricewaterhouseCoopers, voiced his support for Darling: ‘I don’t think it is right to focus on one politically sensitive issue and then conclude that the UK is a tax haven.’