David Cameron offshore fund: PM accused of 'eroding trust' as pressure grows for tax return publication

David Cameron’s failure to reveal his financial gain from an offshore trust set up by late father has led to a “significant erosion of trust” in the Prime Minister and should result in leading politicians being forced to make their tax returns public, Labour opponents have said.

Shadow Chancellor John McDonnell stopped short of calling for Mr Cameron’s resignation over the affair but accused him of not being “straight” with the public and of allowing the story to be “forced” out of him.

At the same time, more than 125,000 people have signed an online petition calling on Mr Cameron to shut down all British-owned tax havens.

Campaign group 38 Degree said a large number of the biggest tax havens were in British crown dependencies and British overseas territories. That, they added, meant the British government has the power to close the tax loopholes.

Mr McDonnell’s comments came after Mr Cameron used a television interview to admit that he and his wife Samantha bought a £12,497 holding in his father’s offshore trust in April 1997 for and sold it in January 2010 for £31,500.

However, they did not pay tax on the profit as the annual personal allowance for an individual in 2009-10 was £10,100 - meaning jointly the profit was just outside the threshold.

Up until his admission, Mr Cameron had denied he was a beneficiary of Blairmore Holdings that was set up by his father Ian in the 1980s and whose existence was revealed in the Panama Papers.

However, Mr Cameron’s previous answers did not rule out the possibility that he had been a beneficiary in the past.

Mr McDonnell said people had the right to expect better from the Prime Minister.

“What's happened over this recent period is there's significant erosion of trust in the Prime Minister because he wasn't straight and he didn't answer straight away and responses, as others have said, had to be dragged out of him,” he said.

"The discussion that has taken place over the last 24 hours has revealed that he actually did benefit from his father's exercise in terms of an offshore trust.

"He should have just said that from the beginning and people would have at least understood where he was coming from."

However, he added: "It's not a matter of resignation at the moment, it's a matter of making sure that the Prime Minister is straight with us."

The Shadow Chancellor, who published his own tax affairs at the start of the year, said it was important for senior ministers to do the same.

He said: "I think it's up to the individual politicians but if you're holding senior office, particularly in regards to the management of the economy, I think actually it's important that you do, that's why I published mine."

Downing Street this morning put up the Skills Minister Nick Boles to defend Mr Cameron in a radio interview. He suggested the PM regretted the way the disclosure about his tax affairs had been handled.

"I'm sure that, with the benefit of hindsight, he would rather that all of what has come out over the last four days had come out on the first day,” Mr Boles told the BBC Radio 4 Today programme.

"I think the instinct is one that we all can identify with, even if it was something that he might well have done differently if given a second chance.

"I think he thought 'I know that I have complied fully with all of the tax laws' and I don't like feeding this mill of preying on his father's memory and his father cannot defend himself."

But Shadow work and pensions secretary Owen Smith said Mr Cameron needed to be "clear" about all his past investments and should "allow sunlight to disinfect him".

“The Prime Minister now needs to come to the country - I think he should do it in Parliament next - and come clean about what the Government's real intentions are about tax avoidance," he said.

He added: "People will now have doubts about the trustworthiness of the Prime Minister, given that he has been so revealed as having double standards, speaking out of both sides of his mouth, not being true to what he said he would do when he came to power."

Dan Jarvis, the Barnsley Central MP widely tipped as a future Labour leader, said the Prime Minister had lost the public’s trust over the issue.

Writing for the New Statesman, he said: “Trust in politics is a rare commodity. Once lost it is almost impossible to regain. The Prime Minister promised transparency both with regards to tax more generally and his own tax return. He has failed even by his own standards.”

Mr Jarvis said the Government should go much further in its crackdown of offshore tax avoidance, calling for a public registry of people’s foreign assets, with penalties for those who did not comply. He said that wealthy tax evaders should be treated like “common thieves” and jailed.

“Those at the top of the government, who have led lives of great wealth and privilege, must now demonstrate with action that they understand that government and leadership carries responsibility. Dazzling rhetoric is no longer enough,” he said.

Speaking on ITV, Mr Cameron had said it had been "a difficult few days" since the mass leak of records from Panamanian law firm Mossack Fonseca and he launched a staunch defence of his father.

He also said he was not able to "point to every source of every bit of the money" that his father left him when he died - which he said amounted to around £300,000.

“I paid income tax on the dividends, but there was a profit on it but it was less than the capital gains tax allowance, so I didn't pay capital gains tax, but it was subject to all the UK taxes in all the normal ways.

"So I want to be as clear as I can about the past, about the present, about the future, because frankly, I don't have anything to hide.

"I'm proud of my dad and what he did and the business he established and all the rest of it.

"I can't bear to see his name being dragged through the mud, as you can see, and for my own, I chose to take a different path from my father, grandfather and great-grandfather, who were all stockbrokers, and I've got nothing to hide in my arrangements and I'm very happy to answer questions about it."