Jim Armitage: Tax-dodge leaks will go on until murkiness is cleared up

Here we go again. Just when you thought the ruckus over tax havens had blown over from the Panama Papers, along comes another offshore mega-leak.

The Paradise Papers show yet again how the world’s elites use the secretive services of Britain’s crown dependencies and overseas territories to keep their assets from prying eyes and tax officials.

What is always striking about these stories is how the public reacts with fury while the City scratches its head and wonders what all the fuss is about.

As with Brexit, directors’ pay and bankers’ bonuses, there is a gulf between what seems right in Canary Wharf, and what feels appropriate to the average citizen.

Nothing makes that gap clearer than the revelation that financial advisers to the Queen considered it fine to stick her money in the Cayman Islands. To outsiders, their actions seem monumentally stupid, particularly after David Cameron’s Panama Papers traducing. But to the advisers themselves, tax havens are so normal they didn’t think twice about how it might damage her reputation to the outside world.

Hedgies and private-equity funds say it makes sense to offer international backers the ability to invest in funds based in a centralised, neutral place like Cayman or the Isle of Man. Such locations are politically stable and don’t add a further layer of taxes on top of those the investors pay at home on the profits.

These arguments could be justified if it weren’t for the secrecy they also afford.

Transparency International points out that, even after new rules forcing havens to share information with tax officials, investigators are barred from so-called “fishing expeditions”. The taxman has to prove a clear reason for investigating.

But the cleverest tax planners leave no trail of suspicion, so havens’ new-found openness is already watered down.

It’s not just about tax, either.

Much of the problem of offshore havens is about the disruption of transparent democracy: how public officials, political donors or big businessmen can use them to hide dodgy activities.