David Cameron 'protected offshore trusts from EU tax crackdown plans'

Mr Cameron faces pressure over his family's tax arrangements in the wake of the Panama Papers leaks Credit: PA

David Cameron intervened to prevent the EU from including offshore trusts in efforts to crackdown on tax avoidance, it has emerged.

In a letter to European Council President Herman van Rompuy, the prime minister argued successfully that trusts should not be subject to the same levels of transparency as offshore companies.

The 2013 letter, which was unearthed by the Financial Times, is still available on the government website.

In it, Mr Cameron writes: “It is clearly important we recognise the important differences between companies and trusts … This means that the solution for addressing the potential misuse of companies - such as central public registries – may well not be appropriate generally.”

The revelation comes as Mr Cameron faces pressure over his family's tax arrangements in the wake of the Panama Papers leaks.

Among the leaked documents from Panama-based law firm Mossack Fonseca are details of a multi-million-pound offshore firm set up by Mr Cameron's late father Ian.

The Panama Paper leaks concern emails from law firm Mossack Fonseca Credit: Reuters

Tax avoidance was a key theme for the G8 group of rich countries when Britain held the rotating presidency in 2013, and included a discussion over a central ownership register at the Lough Erne summit that June.

EU members argued such a database should extend to trusts, but Mr Cameron pushed for a different deal.

Dutch MEP Judith Sargentini, who led the European Parliament's work on the draft law, told the FT that the UK used privacy arguments to justify a different status and that she had seen it "as a danger and as a possible loophole".

But a government spokesman said the stance was taken because of concerns that the effort was a distraction that would detract from efforts to record the beneficial ownership of shell companies.

The spokesman said: "In practice, these further changes weren't achievable. In the subsequent negotiations, we were able to secure a sensible way forward which ensures that trusts which generate tax consequences have to report their ownership to HMRC."

Richard Burgon, a shadow Treasury minister, said the story "completely undermines" claims the government was determined to act on the issue.