An increasing number of government agencies are using tax havens such as Guernsey to avoid paying the higher rate of tax in this country, according to a recent report in the Observer (22 September 2002).
Network Rail, London Underground and the Strategic Rail Authority are all funnelling millions to the island where insurance costs less and tax is lower.
The Association for Accounting and Business Affairs, a pressure group made up of Labour MPs and tax experts, has argued it would be unnecessary to raise taxes for ordinary people if corporations were prevented from channelling millions into offshore tax havens.
The Inland Revenue's special investigation section, which scrutinises sophisticated tax avoidance schemes, is clawing back less now than in 1997 when Labour came into power. The government's new found willingness to make use of offshore ruses itself may signal an official acceptance that tax havens are here to stay.