I. INTRODUCTION

The last decade has seen a renewed and unprecedented push against the offshore tax limitation strategies of large corporations and wealthy individuals. The financial crisis of 2007-8, wave of anti-globalist sentiment in the latter half of the 2010s, and singular events such as the Panama paper leaks, have put continual pressure on governments to act to defend their tax base. This paper examines international policies to curb offshore tax evasion, and specifically considers the role and effects on Britain in the wake of its exit from the European Union this year.

The UK has played an historically important role in facilitating offshore banking. To a large extent rooted in the City of London during the 1950s (as part of the formation of the Eurodollar market avoiding British currency controls), offshore tax evasive practices have developed over the last half century. As the British Crown Dependencies, Overseas Territories and former British colonies became involved, a network of offshore centres connected to financial hotspots in Western countries, particularly London, developed.

Globalisation and the democratization of trade has abetted, rather than limited, this network. As the structure of multinational companies has become harder to delineate in the wake of globalisation, so too has the distinction between legitimate economic activity and mendacious tax limitation.

In the wake of the 2007-8 financial crisis, which buoyed public opinion against perceivably abusive financial and multinational companies, politicians looked partly to curbing offshore tax evasion as a way of tackling hefty fiscal deficits. This led to legal innovations, such as ‘FATCA’ in the US and the OECD’s Common Reporting Standards, which have both had some success in reducing the offshore accounts of domestic companies and individuals. These will both be examined.

The paper begins by addressing the definitional and conceptual surroundings of the concept of tax evasion. It then analyses the current foreign policy objectives in the wake of Brexit. After this, the paper situates Britain and its Crown Dependencies and Overseas Territories in the historical development of offshore and tax havens. After having explored the historical connection between the United Kingdom and global tax evasion, the paper moves on to contemporary efforts.

It first examines EU measures to combatting tax evasion, highlighting the limits of the European Commission’s approach. After leaving the EU, Britain is therefore at a juncture when it comes to strategies of combatting tax evasion. It can pursue a multilateral or unilateral approach. It must be noted that it has not been possible to investigate the implications of the recent withdrawal deal, since the majority of the paper was written in 2020. We therefore apologise if any specific content of the paper is not consistent with recent events. However, our overall argument for a new strategy towards tax evasion, and our analysis of the principles that should underpin such a strategy, are unaffected by the withdrawal deal.

The paper analyses the merits and shortcomings of the unilateral United States’ Foreign Account Tax Compliance Act (FATCA). It then proceeds to analyse the multilateral efforts of the Organisation for Economic Cooperation and Development (OECD). However, any genuinely multilateral effort must pay attention to the dynamics and preferences of the world’s rising economies and developing countries. The paper therefore investigates the measures of particularly China and India. Given Britain’s role in global tax evasion, we argue that any international effort must be complemented by domestic reforms within the UK. The paper therefore investigates the merits and shortcomings of domestic UK efforts at curbing tax evasion. The paper concludes by offering a series of policy recommendations.

As a final introductory point, at the heart of this paper there is a tension between increasing transparency to tackle international tax evasion and protecting the legal right to privacy for