Panama Papers: David Cameron's family's offshore fund highlights tax avoidance

Labour Party leader Jeremy Corbyn is calling for an investigation about whether an investment firm run by the PM's father avoided paying taxes for 30 years, sparking a heated debate about tax avoidance.

For British Prime Minister David Cameron, a growing furor about firms using complex schemes to avoid paying taxes in the UK has now become personal.

Documents in the Panama Papers, the massive trove of material from the Panamanian law firm Mossack Fonseca, describe how a fund run by Mr. Cameron's father avoided taxes in Britain for 30 years.

The disclosure led Jeremy Corbyn, leader of the opposition of the Labour Party, to call for an internal investigation of the allegations, which Cameron has repeatedly described as a "private matter."

"Well, it’s a private matter in so far as it's a privately held interest. But it's not a private matter if tax is not being paid," Mr. Corbyn told reporters on Tuesday. "I think the prime minister, in his own interest, should tell us exactly what’s been going on," he added.

The issue of tax avoidance by multinational companies has become increasingly heated in the UK. Lawmakers have particularly criticized American tech firms such as Google and Apple for employing what critics say are complex schemes that allow the companies to pay very little tax despite employing hundreds of workers in Britain.

Ian Cameron served as director of Blairmore Holdings, which avoided paying taxes by hiring a "small army" of Bahamas residents – including a part-time bishop – to sign its paperwork, according to the Guardian, which analyzed the leaked documents. Questions about the company's tax record had previously surfaced in 2012. 

The elder Mr. Cameron died in 2010, and the firm – named for the family's ancestral home in Scotland – appears to still exist.

Some of the revelations may also raise questions about the Cameron government's commitment to tax avoidance.

Until 2006, for example, Blairmore was run using a financial instrument known as bearer shares, which resembles banknotes in that they don't carry an owner's name and belong to whoever holds a share's certificate.

While bearer shares have been used by other firms, they have drawn scrutiny for their potential to be used to launder money by "mobsters and tax evaders," according to the Guardian.

Blairmore stopped using them in 2006, and the Prime Minister's government banned companies from issuing bearer shares in 2015.

On Tuesday, an aide for the prime minister hit back at Corbyn’s call for an investigation, questioning Labour's record on the issue.

Cameron has "taken a range of actions to tackle evasion and aggressive tax avoidance," a spokeswoman told the Guardian. 

Other British politicians, including businessman Michael Ashcroft, a Conservative former member of the House of Lords, have also been implicated in the Panama Papers. Mr. Ashcroft has previously faced criticism as a "tax exile" for establishing a permanent residence in Belize.

In his speech on Tuesday, Corbyn contrasted his own background with that of Cameron, whose family history in the banking industry dates to the 19th century.

"There is no problem with my tax affairs. They are very, very limited indeed. I have got an income as an MP, sadly I have got no family trusts of any sort," the Labour leader said.

The UK's tax authority, known as HMRC, told the Independent that it wouldn't confirm whether or not Blairmore Holdings would be investigated. But the authority said that tax inspectors have asked the International Consortium of Investigative Journalists, which spearheaded the investigation, to share its data.

"The government needs to stop pussyfooting around on tax dodging," Corbyn said. "There cannot be one set of tax rules for the wealthy elite and another for the rest of us. This unfairness and abuse must stop. No more lip service," he added.