Europe could “go after” Britain’s network of tax havens if Brexit trade talks do not deliver for Brussels.
The European Commission is to review whether British territories previously left off a tax haven blacklist should now be added.
That list – published at the beginning of last month – included American Samoa, Bahrain, Barbados, Grenada, Guam, South Korea, Macau, Marshall Islands, Mongolia, Namibia, Palau, Panama, Saint Lucia, Samoa, Trinidad and Tobago, Tunisia and the United Arab Emirates.
But territories with strong British connections – Jersey, the Isle of Man, Guernsey, Bermuda and the Cayman Islands – promised to do more to clean up their tax avoidance act.
However, according to The Independent, EC officials are concerned about the Turks and Caicos Islands and Anguilla.
Some officials told the paper that the EU could potentially use an upcoming review as leverage in the Brexit trade talks, even going as far as to threaten to pursue the territories for revenue after March 2019 withdrawal.
They went on: “The UK has always protected them [the territories] in the past. That is not going to happen in future. We will go after them.”
A European Commission source said it was “significant” that none of the territories were mentioned in the joint EU-UK report on phase one of Brexit last month.
The issue of tax avoidance gained renewed publicity last year with the leak of millions of documents dubbed the Paradise Papers.
The papers exposed the tax avoidance affairs of scores of high profile people – from the Queen to F1 champion Lewis Hamilton – and also shone a spotlight on the countries and territories that facilitate the schemes.
EU officials are to meet next month to discuss potential sanctions against blacklisted jurisdictions that refuse to help the bloc track down revenue.
Nicky Morgan, chair of the Treasury select committee, told The Independent: “To be honest, if the EU thinks trade negotiations are going well they won’t make a fuss about our overseas territories.
“If they think they are not, they will. They will flex their rules according to what suits them best.”