FTSE 100 tax haven tracker: the new data

How did you get the data?

UK company law compels companies to report all of their subsidiary companies, together with their country of registration. Companies should include this in their annual report or, where the comprehensive list is of excessive length, they can include it within their annual returns filed with the UK company regulator, Companies House. This is sometimes the only public record that they control the offshore companies on their list, a vital starting point for authorities scrutinising these companies. In the wake of recent offshore scandals, French President Francois Hollande has similarly called on French banks to declare all their subsidiaries.

When we started to look for this information in 2011, we discovered that more than half of the FTSE 100 were not complying with this legal obligation. When enquiries to individual companies failed to persuade them to disclose the information, we submitted complaints to Companies House, forcing companies to re-file their annual returns with the information included, and sparking Business Secretary Vince Cable to announce an inquiry and possible legal action.

Yet when we sought to update our tracker in 2012 with companies’ latest filings, we found that one in 10 of UK-headquartered FTSE 100 companies were still not complying – some of whom had been previously non-compliant too. When we asked Companies House, they told us that they had simply decided not to change any procedures or actively enforce the law, since they believed it would be “too resource-intensive” to check companies had made the legally-required disclosures. Rather, they will still accept incomplete filings, leaving it up to members of the public, journalists or organisations like ActionAid to bring non-compliance to their attention. Shadow Business Secretary Chuka Ummuna has called for a government investigation in the wake of this latest revelation.

When we began this project in 2011, ActionAid was assisted by company information specialists Duedil to process the data into a useable format. The annual returns, which in most cases were available only as scanned PDF files from Companies House, were converted to text using Optical Character Recognition (OCR) software, after which extensive corrections were made. Our update in 2012 was verified by two separate, complete manual verification checks.

You can download all the new data here.

What is the FTSE 100?

The FTSE 100 is a list of the largest 100 companies listed on the London Stock Exchange, measured by market capitalisation

The composition of the FTSE 100 changes regularly. Our updated data uses the index as it was composed on 1 September 2012, to submit complaints against any new constituents that did not comply since our major complaint was submitted earlier in the year. Since that date, one group (Aberdeen Asset Management Plc) has been replaced in the official index, two groups have merged (Glencore and Xstrata), and two have joined which are not included here.

We used the annual returns that were available on the Companies House website on that date, although the lists for a few groups are more recent because they were obtained through a subsequent complaint. Some groups may have filed new annual returns with updated subsidiary lists since 1 September 2012, but we have not been able to take this into account because of the time required to assemble usable data.

Have you missed a company?

The lists of companies are disclosed by the parent group, but not verified by Companies House. ActionAid has taken this information on trust. Not all companies have used the same criteria to determine their lists (see question 6) which may mean that some may have omitted companies often connected to them.

Ten of the FTSE100 are listed on the London Stock Exchange but registered offshore, and are only obliged to disclose their 'principal' subsidiaries in their annual accounts. For these companies we have used either these abridged lists, or longer lists filed with the US Securities and Exchange Commission (SEC) in some cases.

We were unable to obtain comprehensive lists of subsidiaries for Aberdeen Asset Management Plc in time to include it, and so have used the principal subsidiaries listed in their latest annual report.

The only FTSE 100 group we have not been able to fully update since 2011 is WPP Plc. The group, headquartered in a Jersey-registered company, is therefore not required to file subsidiary lists with UK Companies House. In its more recent filings with the SEC, WPP has also taken advantage of an SEC exemption to file only a much shorter list of principal subsidiaries, so a current list is not available. ActionAid wrote to WPP Plc on 21 March 2013 to request a full updated subsidiary list, but at the time of going to press had not received any further information from WPP. We have therefore added any subsidiary companies newly disclosed in WPP’s (shortened) SEC list for 2012, but have not deleted any from the longer list which was available in 2011.

Are there any errors in the data?

Because the original basis of our dataset is scanned PDF files, sometimes with poor legibility, converted back into text, there are inevitably a few typing errors. Sometimes the software we used makes mistakes when reading documents. For example, 'America' often comes out as 'Amenca'. We checked through the data afterwards, but with over 33,000 entries it’s inevitable that some errors crept through. It looks to us like there were some errors in the source documents, too, but we’ve tried not to correct these unless we were sure about them. We’d welcome any corrections that users can spot..

Are there duplicate companies?

If you think you have found a duplicate, please check and make sure that you have as sometimes companies with the same name exist in different countries.

Despite our efforts to make sure the data is accurate, there are still some duplicates, for three reasons:

>> Some groups submitted lists of companies in tree structures. Because multinational groups often have complex joint ownership structures, many companies within them crop up in these diagrams several times. We tried to remove these duplicates, but OCR errors combined with the odd inconsistency in the source documents means we may not have removed them all.

>> Some multinationals seem not to be entirely sure themselves! Apparent duplicates, with slightly different names, crop up in several of the source documents. We haven’t removed them unless we were sure they were duplicates.

>> Some companies are joint owned by two or three different FTSE-100 groups, and crop up in all their lists. So they will appear two or three times, within the lists for each parent group.

What are the income groups?

We used the World Bank’s classification. View this classification on the World Bank website

Where is your list of tax havens from?

There is no standard international definition of tax havens or secrecy jurisdictions.  For this research, as previously, we have used a list compiled by the Government Accountability Office of the United States Congress, of “Jurisdictions Listed as Tax Havens or Financial Privacy Jurisdictions.”  We also include the US state of Delaware and the Netherlands, since these jurisdictions provide corporate secrecy (in Delaware’s case), special tax exemptions and discretionary tax rulings which make much foreign income tax-free or nearly tax-free, and are consequently central to many international tax planning schemes. Each has been named by governments as tax havens. 

The US Treasury’s own Financial Crimes department has listed Delaware as a jurisdiction whose corporate laws, “may be attractive to those persons seeking to hide illicit activity within the framework of shell companies.” The Whitehouse likewise named the Netherlands as a tax haven in 2009. Other US states, most recently Pennsylvania, have begun to describe Delaware as a domestic tax haven, enacting laws to prevent profit-shifting and avoid state-level taxes via the domestic ‘Delaware loophole’. While some argue that the USA’s 35% federal tax rate means that Delaware is not an international tax haven, in practice many Delaware companies – especially LLCs - without US-origin income can be exempt from US federal tax if structured appropriately, making federal tax rates often irrelevant. 

Read the GAO report

>> Find out more on the role of the Netherlands as a tax haven

>> Find out more on the role of Delaware as a tax haven

Contrary to popular opinion, the Organisation for Economic Co-operation and Development (OECD) does not maintain a list of tax havens. A list of 'non-cooperative jurisdictions' , originally published for the London summit in 2009, is based on a narrow set of criteria and has since been updated so that only five countries are now listed as non-compliant.

An OECD report in 2000 did give a list of 40 tax havens, but this list is no longer up to date.

All of the jurisdictions on the list we have used are profiled on Financial Secrecy Index website