A recent large scale leak of financial documents has revealed just how high profile individuals secretly invest cash in offshore tax havens.
Cases such as the Queen’s private estate and Donald Trump’s commerce secretary have been unveiled by the leak, prompting criticism and investigation.
The leak has been dubbed the Paradise Papers. It contains 13.4m documents, most originating from one firm, Appleby, a Bermuda based legal services provider.
The German newspaper Süddeutsche Zeitung who obtained the Panama Papers last year also obtained this latest leak and called in the International Consortium of Investigative Journalists (ICIJ) to oversee the investigation.
The Queen’s involvement
The Paradise Papers reveal that £10m of the Queen’s private money has been invested in offshore accounts.
The funds were invested in the Cayman Islands and Bermuda by the Duchy of Lancaster who handles all the investments for the Queen and provides her with an income. The Duchy of Lancaster said it was not involved in specific investment decisions made by the accounts.
Some small investments were made to rent-to-buy retailer BrightHouse which has faced criticism for years for exploiting the poor. The Duchy admitted it had no idea about the 12 years of investment in BrightHouse but would not disclose details of their original investment in 2005 when the company experienced a boom in value.
Another investment was made in Threshers, a chain of off licenses. This eventually went into administration, owing £17.5m in tax and costing 6,000 jobs.
The investments made by the Duchy are not illegal. However, those who look to avoid tax through loopholes and offshore accounts face a lot of criticism. Many are asking whether the UK’s head of state should be investing offshore. However, the estate claims that it has received no tax advantages from investing offshore.
Are tax havens good or bad?
Critics of offshore investments suggest that the price of the super-rich avoiding tax is that poor people will have to pick up the bill. Many say that governments are not doing enough to stop tax avoidance and that the economy is missing out on huge payments that they need.
However, those who are in favour of offshore investments claim that without these havens, the government would have no limits on the amount of tax they might levy.
Bermuda’s finance minister, Bob Richards also pointed out that he was not responsible for the UK’s tax affairs and that the British government was instead.
What do you think about the new leak? Do you think the Queen’s estate should be involved in offshore accounts? Let us know your thoughts.