Towards transparency

A cautious welcome for Vince Cable’s reform

As this newspaper’s campaign to end the scandal of corporate tax avoidance has shown, the key to making companies that make their living here pay their fair share is transparency. Vince Cable’s proposed reforms are revolutionary in their potential. No longer, if these proposals are adopted, will individuals and companies be able to shelter behind offshore trusts and private companies in secretive financial regimes trailing round the world, from Switzerland to the Caribbean and back again.

Mr Cable needs to be sure of doing two things as he works his way towards legislation. First, he has to ensure an adequate regime of punishment for transgressors, and this goes for dishonest or negligent directors, too. One of the great mysteries of the financial crash of 2008-09 is how so few of the directors and executives who drove their banks to ruin suffered even the mildest of punishments – set against the wrecking of an economy, they can fairly be said to have got away with it.

Second, he’ll need to ensure that the spirit and purpose of what Parliament intend cannot be frustrated by the army of tax accountants and advisers whose job it is to flout the will of the people. As Chancellor, Gordon Brown tried to do something similar with domestic tax evasion, requiring accountancy firms to declare any schemes they hatch. That has not had the impact expected or desired, thanks to the habitual ingenuity of the “tax professionals”. Mr Cable, smart as he is, has his work cut out to beat them at their own game.