Panama impact: Cameron brings new tax evasion law in UK to regain trust

To repair trust in his leadership hurt after the Panama Papers leak, British Prime Minister David Cameron on Monday sped up the legislation to make companies criminally liable for employees who aid tax evasion.

After a week of questions over his personal wealth and his late father’s connection to an offshore fund, Cameron has moved to defuse criticism over his handing of the fallout from the Panama Papers by publishing his own tax records.

Seeking to boost his anti-corruption credentials, he was to the Parliament on Monday that he would introduce a legislation this year making it a criminal offence for companies if they fail to stop employees from instructing clients on ways of evading tax.

But with opposition lawmakers saying Cameron had not done enough to silence concerns about his wealth and members of his Conservative Party critical over his role in leading the campaign to stay in the European Union at a June referendum, the move is unlikely to calm the storm over the Panama Papers.

“This government has done more than any other to take action against corruption in all its forms, but we will go further,” Cameron will tell parliament, according to advance excerpts of his statement circulated by his Downing Street office.

“That is why we will legislate this year to hold companies who fail to stop their employees facilitating tax evasion criminally liable.”

The plan was announced by finance minister George Osborne in March 2015, but previously the commitment was to introduce the legislation by 2020, Downing Street said.

Accountants said the move could force companies to be punished for “rogue employees” and may increase the risk burden on firms doing business in Britain, which has already seen lower levels of investment because of uncertainty over whether the country will stay in the European Union at the June 23 vote.

“First let’s not have knee jerk reactions to Panama Leaks and the UK PM’s personal issues,” said Chas Roy-Chowdhury, head of tax at ACCA, a global accounting body based in London.

“We need to be proportionate and realistic in any new legislation being introduced,” he told Reuters.

Transparency

Cameron is hoping to regain the upper hand after facing accusations of hypocrisy for going after tax evaders when his father had set up an offshore fund.

On Thursday, he bowed to pressure and said he had profited from selling his shares in the fund in 2010 and on Sunday he published a summary of his tax records for the past six years.

But any hope he might draw a line under the row was short-lived, as local media zeroed in on a gift of 200,000 pounds ($282,500) Cameron received from his mother in 2011.

Some reports suggested it may have been a way of avoiding inheritance tax, though the Financial Times quoted tax experts as saying that was not the case.

With the Panama Papers leak having given fresh impetus to criticism that the government favours Britain’s elite over ordinary voters, the wealth of other leading Conservative politicians has also come under scrutiny.

A source close to finance minister George Osborne, an ally of Cameron, said he was “always happy to consider ways to offer even more transparency”, but “had never had any offshore shareholdings or other interests”.

Cameron’s spokeswoman said Cameron believed it was right that future British leaders and finance ministers should publish information on their tax returns.

The leader of the main opposition Labour Party, Jeremy Corbyn, called for all lawmakers to publish their tax records.

Euro Imbroglio

The questions come at a difficult time for Cameron’s cabinet of senior ministers, who are split over whether Britain should stay in the European Union and have been criticised for failing to bail out the steel industry.

Cameron has cast himself as championing a crackdown on tax evasion and will host an international summit next month to tackle corruption.

The government says that it has brought in more than 2 billion pounds ($2.8 billion) from offshore tax evaders since 2010 and has established a registry of company beneficial ownership information due to become public in June this year.

But for Labour, one lawmaker said it was time to press further for tax reform.

“It’s time for Labour ... to restore some basic fairness to our system of taxation,” Wes Streeting wrote.