Welsh town to copy Isle of Man model in TV tax haven documentary

The Isle of Man’s role as an offshore finance centre will come under the spotlight on television following a Welsh town’s experiment in how to avoid paying UK tax.

Independent traders in Crickhowell, led by the salmon smokery, the local coffee shop, the adventure clothes shop, the optician, the book shop and the bakery, adopted practices used by multi-national giants such as Google and Starbucks in a protest bid to move their entire town ‘offshore’.

Shopkeepers in the Powys market town submitted their own DIY tax plan to UK tax authorities, copying offshore arrangements used by global brands such as Caffé Nero, which critics claim has not paid corporation tax in the UK since 2008 despite recording sales worth £1.2bn.

A BBC2 documentary following Crickhowell’s tax rebellion show four of the traders visiting the Isle of Man, where a parent company of Caffé Nero is based.

They say other towns in the UK could follow their example – and their aim is to force Treasury to crack down on loopholes that allow multinationals to pay little or no corporation tax.

Exact details of the tax avoidance scheme have been kept under wraps but is said to involve shifting intangible assets to the Isle of Man and setting up a trading arm in the Netherlands.

Chief Minister Allan Bell MHK insists the island does not encourage aggressive tax planning.

Jo Carthew, who runs Crickhowell’s Black Mountain Smokery, said: ‘We were shocked to discover that the revenue generated by hard-working employees in these British high street chains isn’t declared. We do want to pay our taxes because we all use local schools and hospitals but we want a change in the law so everyone pays their fair share.

‘Until now, these complicated offshore tricks have only been open to big companies who can afford the lawyers’ fees. But we’ve put our heads together and worked out a way to mimic them.’

She added: ‘It’s a threat to the government because if they don’t act this could be rolled out to every town. Everything we have proposed is legal.’

Local baker Steve Askew said the traders never intended to put their tax plan into practice but use it as a way of embarrassing the UK government and big businesses into taking action.

He said: ‘Any right thinking person accepts we have to pay taxes. When people can’t accept is the injustice.’

Russian-born Irena Kovaleva of Crickhowell Optometrists, who has lived in Wales for 15 years, said she had embarked on the project out of curiosity. ‘Why is the government not doing more?’ she asked.

HMRC has responded to Crickhowell’s initiative by pointing out that extra funding has been made available to crack down on multinational tax avoidance. UK Chancellor George Osborne has pledged to introduce a Google Tax designed to discourage large companies diverting profits out of the UK to avoid tax.

Chief Minister Allan Bell said: ‘The Isle of Man has been very closely following international standards to prevent aggressive tax avoidance and evasion.

‘We work closely with the UK tax authorities and no way encourage this type of behaviour.

‘The Isle of Man economy pumps billions of pounds into the UK through the City of London and indeed wider with, for instance, investment in Merseyside through Manx companies like Peel Holdings.’

The BBC2 documentary The Town that Went Offshore, presented by Heydon Prowse, co-creator of BBC3 series

The Revolution will be Televised, is due to be screened next year.