The papers centre on law firm Appleby, which has offices in notable tax havens around the world including Bermuda, the Cayman Islands, Isle of Man, Guernsey and Seychelles.
This is the second biggest recorded data leak (1.4 terabytes) next to last year’s Panama Papers (2.6TB), and it uncovers how some companies and wealthy individuals can legally dodge paying tax.
The papers revealed that millions of pounds from the Queen’s estate were invested through the Duchy of Lancaster into an undisclosed offshore portfolio in the Cayman Islands, according to The Guardian.
These investments reportedly included money that was put into troubled rent-to-own retailer BrightHouse, which was recently ordered by the Financial Conduct Authority to pay £14.8m to customers for not acting as a “responsible lender”.
Lord Michael Ashcroft, a major donator to the Conservative Party, was also exposed in the leaks, having been linked to a trust in Bermuda with assets worth £341m.
US secretary of commerce Wilbur Ross has come under fire after he was found to have kept undisclosed investments in shipping firm Navigator Holdings. One of the firm’s major clients is Russian energy company Sibur, which is partially owned by Vladimir Putin’s son-in-law.
In a statement, Appleby insisted there was no “wrongdoing” on its part, and claimed to be the target of an “illegal computer act” rather than a leak.
“We are a law firm which advises clients on legitimate and lawful ways to conduct their business. We operate in jurisdictions, which are regulated to the highest international standards,” the statement read.
Shadow chancellor John McDonnell called the leaks “deeply worrying revelations” and said they provided proof of tax avoidance continuing on an “industrial scale”.
“Either the Prime Minister or the Chancellor needs to explain how this scandalous behaviour has been allowed to go on unaddressed for so long and what action is to be taken now.”
Milestone International Tax partner Miles Dean said it would be “surprising” if the tax affairs of those implicated in the Paradise Papers were “illegal or nefarious”, and that the theft of the papers was illegal.
“Just because an individual makes an investment that is based offshore does not mean that they have done anything wrong – if they fail to disclose it (and the return they make) on their tax return then that’s tax evasion,” he said.
“But to make a quantum leap and suggest that everyone from the Queen to Bono is dodging tax because some of their investments are made via Bermuda, Cayman or Malta is stupidity on a grand scale.”
Dean said McDonnell’s comments were “wide off the mark”, adding that imposing a withholding tax on dividends would not stop tax abuse.
“It would simply make the UK less competitive as a jurisdiction for large multinationals, at a time when we need to be more competitive than ever,” he said.
In October, HM Revenue and Customs reported that the tax gap was at its lowest level in 10 years, falling to a record low of 6% (£34bn) in 2015/16.