Government pulls Financial Services Bill over fears it faced defeat on amendment to increase transparency in UK tax havens

Ministers are under fire for postponing a bid to bring transparency to tax havens over fears of government defeat in the Commons.

At the eleventh hour, the Financial Services Bill was pulled from debate in the Commons after backbench MPs tabled a plan to force areas under UK jurisdiction to be more open about who owns assets held there.

The bill would have forced Britain’s crown dependencies to create public registers of beneficial ownership – something the UK has already established.

Protesting against the move, the leaders of Jersey, Guernsey and the Isle of Man were set to warn today of a constitutional clash if Westminster backed the move to increase transparency on the islands, according to the Financial Times.

But it was claimed that over a dozen Conservative MPs supported the amendment, meaning the government had faced “almost certain defeat”, according to one of those spearheading the plans.

The bill is also one of a number of key pieces of legislation needed to prepare the UK for the possibility for a no-deal Brexit and will still need to be passed before Britain cuts ties with the bloc.

Labour MP Margaret Hodge, who tabled the amendment, said: “I have been working with Andrew Mitchell on an amendment that brings transparency to Britain’s tax havens.

“In a time of division we have shown that cross-party consensus can be built. Public registers are the next big step for tackling money laundering and tax evasion.

But she added: “The government have taken the outrageous step to pull the bill from today’s business. They knew we commanded a majority. I hope the government will accept our proposals but if not we will continue to campaign for public registers. It’s the will of parliament.

Shadow treasury minister Jonathan Reynolds said: “There were amendments on preventing a ‘race to the bottom’ on financial deregulation and on transparency for the overseas territories and crown dependencies that we had hoped to pass.”

He said the government had “nakedly pulled” the legislation to avoid being defeated, adding: “How long can this go on?”

Shadow chancellor John McDonnell said it was “more evidence that this government is incapable of getting its business through parliament”, adding, “People have just had enough of the chancellor dragging his feet on tackling tax avoidance. We are demanding action now and no further delays and excuses. The government has been a friend to tax avoiders for too long.”