By Vanessa Houlder, Financial Times

As David Cameron sets his sights on securing a historic victory in the fight against tax evasion at the G8 summit, he is braced for charges of hypocrisy as protesters take aim at Britain’s extensive array of tax havens.

The prime minister recently sent letters to all the Crown Dependencies and Overseas Territories with big financial centres, saying: “This is the critical moment to get our own houses in order.”

But the UK’s substantial network of offshore centres is routinely cited as justification for the reluctance of countries like Luxembourg and Austria to share bank information. Eveline Widmer-Schlumpf, the Swiss finance minister, recently hit out at opaque trust structures in “offshore financial centres which adhere to Anglo-Saxon law”.

Campaigners and charities are also ratcheting up the pressure. ActionAid, a campaign group, has reported that nearly one in every two dollars of large corporate investment in developing countries was routed through a tax haven. It said: “As chair of the G8, the UK cannot credibly lead action of tax havens without addressing its own network of tax havens – larger than any other country in the world.”

The government has already secured big concessions on the back of sweeping new disclosure rules introduced by the US. Earlier this month George Osborne, chancellor, hailed “a turning point in the fight against tax evasion and illicit finance” after the offshore locations signed up to automatic information exchange.

But now the government is pressing still harder, asking them to swap information with a wider group of countries and to draw up plans for central registries that contain details of the true ownership and control of every company.

The changes demanded by Mr Cameron raise the question of whether they could damage Britain’s interests, at least in the short term. The City of London benefits from the large sums – running into hundreds of billions of pounds – channelled through Jersey, Guernsey and the Isle of Man.

The UK might also have to step in with funding if the economies of any of the weaker territories were seriously damaged, as it did when the Turks and Caicos Islands were hit by a corruption scandal in 2009.

Allan Bell, chief minister of the Isle of Man, says he is “quite comfortable” with the G8 agenda, which he does not expect to have a negative impact on his jurisdiction.

But he is concerned that no thought has been given to the impact of extra compliance costs on the smaller centres. “I think there needs to be a recognition that for many small jurisdictions, financial services is vitally important to keep their economies going. They have very fragile economies.”

The offshore centres are reluctant to complain, stressing the advantages of being seen as compliant. The Turks and Caicos Islands said: “High standards do not frighten us and we recognise that they are good for business.”

Perin Bradley, trade and investment officer of Anguilla, home to more than 10,000 companies, says: “Obviously, the local financial services industry is quite concerned about the cost of implementing these initiatives and the increased compliance burden. However, the industry is more concerned with protecting Anguilla’s reputation as a well-regulated jurisdiction.”

Offshore centres fear that clients will gravitate to less transparent locations, particularly in Asia. Orlando Smith, premier of the British Virgin Islands, which found itself in a spotlight across the world after a data leak, says: “Without a level playing field we will see a transfer of financial activity to ones that lack transparency. “

Many of the bigger offshore centres are also perturbed by Mr Cameron’s call for them to set up registers of companies’ “beneficial” ownership because their regulations requiring company service providers to hold these records go beyond the standards of onshore centres.

A 2011 World Bank study concluded that the countries described as tax havens had “higher standards in corporate transparency, at least at the company-formation stage, than those in other countries”.

Mr Bell said: “The thing I find a bit frustrating – I am also puzzled by – is the G8 agenda seems to be focused more on small jurisdictions. The Isle of Man is well ahead of UK, US and Europe in holding this information. Unless this is a genuinely global agreement it is not worth the paper it is written on.”

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