UK Urged to Impose “Direct Rule” on British Overseas Territories

Labour leader Jeremy Corbyn has called on the UK government to consider imposing “direct rule” on the 14 British overseas territories and three Crown dependencies if they fail to comply with international tax standards.

Pressure Mounts on Tax Havens

The move comes as pressure mounts on these jurisdictions to crack down on tax evasion and avoidance. The UK government has been urging them to sign up to international treaties on tax and publish national action plans on beneficial ownership, detailing the true owners of shell companies. However, some experts have questioned whether direct rule is a viable option.

Constitutional Complications

Direct rule would require significant changes to the constitutional relationships between the UK and its overseas territories. The Crown dependencies, which include Jersey, Guernsey, and the Isle of Man, are responsible for their own taxation and have their own governments. They rely on the UK for international relations and defence, but can also exercise a degree of autonomy.

British Overseas Territories

The British overseas territories, such as Gibraltar, Bermuda, and the Cayman Islands, have similar arrangements with the UK.

Evidence of Corruption

Corbyn’s call to impose direct rule comes after evidence emerged of widespread corruption among the ruling elite in some of these jurisdictions. The Turks and Caicos Islands, for example, were subject to direct rule from 2009 to 2012 due to allegations of corruption.

Expert Opinion

“This is not a simple issue,” said Graham Aaronson QC, a tax barrister who led a tax study for the government in 2011. “It’s a constitutional law issue, whether it’s possible. Anything is possible if they are British dependencies. But is it a sensible suggestion or just a reaction? What are you going to do, impose tax rule if, is it a threat?”

UK Government Action

The UK government has already taken steps to tackle tax evasion and avoidance, including urging the overseas territories to sign up to international treaties on tax and publish national action plans on beneficial ownership.

Concerns about Tax Secrecy

Corbyn’s call for direct rule highlights the ongoing concerns about tax secrecy and lack of transparency in some of these jurisdictions. The Cayman Islands, for example, has been accused of being a haven for tax evaders and money launderers.

Future Uncertainty

The UK government is expected to continue to pressure the overseas territories and Crown dependencies to comply with international standards on tax transparency and beneficial ownership. However, it remains to be seen whether direct rule will ultimately be imposed.