Panama Papers: Jeremy Corbyn says David Cameron should impose 'direct rule' to end UK tax havens

'The point is, they are not independent territories', Labour leader says

Mr Corbyn said: “We need to know where somebody’s income comes from' (Reuters)

Jeremy Corbyn has called for an investigation in the tax affairs of the Cameron family and urged him to impose “direct rule” over British overseas territories and Crown Dependencies that act as tax havens

Mr Corbyn said that revelations about Mr Cameron’s father’s tax arrangements should be part of a wider UK investigation into the Panama Papers.

He said he had “no problem” with publishing his tax return and indicated that Mr Cameron should do the same.

“I think we need to know where somebody’s income comes from,” he said. “The public need to have confidence that their representatives and ministers are getting their income from honest and open sources as members of Parliament.”

to ensure they comply with UK tax law, Jeremy Corbyn has said.

The Labour leader also said that the governments of overseas territories needed to “understand the anger” in Britain about the hidden wealth exposed by the leak of millions of documents from the Panama law firm Mossack Fonseca.

He also pledged to publish his tax return and urged ministers to do the same. The call comes as Downing Street declined to confirm whether David Cameron’s family still had money invested in an offshore fund, following revelations that his late father ran an investment fund in the Bahamas which never paid UK tax.

His comments will increase pressure on the Government to take firmer action to clean up the tax affairs of the UK-administered territories which are at the heart of the shadowy tax avoidance networks revealed by the Panama Papers.

More than half the 300,000 companies assisted by Mossack Fonseca were incorporated in UK-administered tax havens, with the British Virgin Islands the most popular jurisdiction. British law firms, middlemen and banks were also implicated in the leaked documents.

“The point is, they are not independent territories,” Mr Corbyn told the BBC. “They are self-governing, yes, but they are British crown dependent territories, therefore surely there has to be an observance of UK tax law in those places.

“If they become a place for systematic evasion and short changing of the public in this country then something has to be done about it. Either those governments comply or a next step has to be taken.”

He said “direct rule” could be implemented “very quickly if that’s what the government decides to do”.

Downing Street has said the Government is already taking action to ensure greater transparency around the tax affairs of companies incorporated in overseas territories and dependencies. Mr Cameron has written to leaders of overseas territories calling for public registers of companies’ beneficiaries, but only two have so far taken action.

Dominic Grieve, the former Conservative Attorney General, said that legislating to impose tax rules on overseas territories and dependencies would be a “nuclear option” for the Government which would fundamentally change the Westminster government’s relationship with the territories.

However, former Business Secretary Vince Cable said direct rule was an option.

"We can't send gunboats these days but we can take the small territories under direct rule,” he said.

Meanwhile the Shadow Chancellor John McDonnell said the Prime Minister should take action over reports that Conservative Party donors were among the individuals revealed to have links to tax haven networks.

"We need to know the truth behind reports that the Conservative Party has received substantial donations from those linked to this scandal. The Tories should come clean and set out exactly what the situation is – is the Prime Minister happy to receive money from big donors who are accused of tax avoidance?” he said.