The first thing to note is that this story emerged from a hack of documents from a reputable law firm.
This has largely been overlooked by the mainstream media and few (including, if I’m honest, me) have made the point with sufficient force that the protection of lawyer-client communications and advice exists for a reason, and we erode it at our peril.
The second thing to note is that so far there appears to be little of revelation in the leaked papers about the role of offshore, or the role of offshore advisers.
The case of the Queen and her investments seemed to conflate a number of largely unremarkable observations – the Queen is wealthy, private equity funds are structured offshore to avoid an additional and economically unsustainable level of tax, some investment portfolios contain shares in companies whose business model one may question – and to conclude that this is damning for the offshore sector.
Some of the papers suggest a variety of other different scenarios – whizzy remuneration schemes of the type that gave Jimmy Carr a degree of notoriety, possible shortcomings in the implementation of structures, differing interpretations of taxing statutes by revenue authorities – but there appear to be no smoking guns at the time of writing that would fundamentally change the way in which we see the offshore sector operating.
Moreover, there have been, and continue to be, major reforms in the way in which the offshore sector operates and the way in which it interacts with the rest of the world. If the public is expecting the Paradise Papers to reveal stories of briefcases full of laundered cash arriving on tropical islands, they are likely to be disappointed.
The UK Chancellor is delivering his Budget on 22 November 2017. I would expect him to mention the leaks in passing, noting – correctly – that the UK is a world leader in clamping down on tax avoidance.
Will he announce fundamental changes to the taxation of offshore funds, or trusts, or non domiciles? I suspect not. The debate about international tax is not just a debate in which experts should participate, but the discussion needs to be non-hysterical and properly informed.
Doing that off the back of a hack of a law firm does not seem to be a great starting point.
Jeremy Cape is a tax partner at Squire Patton Boggs