There's a strange article on offshore in Accountancy Age this week. It begins with a summary of recent attacks on tax havens, quoting me extensively saying:

Richard Murphy, an offshore tax expert and director of Tax Research LLP, is a vocal critic of offshore tax havens. He reckons these tax havens and their advisory services will be caught in a pincer movement between the current economic crisis and further crackdowns from governments.

The big accounting firms will come under increasing pressure to reduce their offshore tax practices, he adds. 'You cannot expect places like the UK to license your activities, to offer you consulting contracts and to then go out of your way to destroy the UK government's revenue stream.'

Then it notes

Prem Sikka, professor of accounting at the University of Essex, also predicts tough times ahead for offshore tax havens. 'My feeling is that the offshore world is increasingly going to be squeezed and that their secrecy is going to be eroded,' he says. He adds that tax havens will face growing pressure to become more open from governments and trading blocs like the European Union.

'Lots of countries are facing budgetary deficits and there is a limit on how much tax they can levy on individuals. [Governments] will hone in on tax avoidance and there is no way offshore centres can avoid this.'

And then it goes completely offtrack, providing a new and quite fascinating insight into what the Isle of Man really does:

Tax experts are predictably more optimistic about the future of offshore tax centres. Government crackdowns on offshore tax avoidance schemes have made planning more difficult, they admit, but new rules open up new business opportunities.

Paul Hotchkiss, director, tax, at KPMG in the Isle of Man, says: 'The offshore environment has been changing over the years. It adapts new solutions when legislative regimes come into play. An example of this is Protected Cell companies [investment schemes introduced in Guernsey in 1997]. They have been used for funds but now they are being used for Capital Gains Tax planning.'

That really is an interesting observation: I have long suspected that protected cell companies are being used to the tax abuse. Now KPMG have confirmed it. And let's also be clear, there is no capital gains tax in the Isle of Man so the planning that KPMG are talking about has nothing to do with that jurisdiction. It has everything to do with the UK. And in a nutshell KPMG have confirmed that the Isle of Man sits absolutely fairly and squarely into the definition of a secrecy jurisdiction (tax haven, if you insist) that the Tax Justice Network and I have been promoting which says that these places:

a) create regulation for the primary benefit and use of those not resident in their geographical domain.

b) create a deliberate, legally backed veil of secrecy that ensures that those from outside the jurisdiction making use of its regulation cannot be identified to be doing so.

Using a structure only available offshore to undermine UK capital gains tax clearly fits into the first definition. And let us also be clear: protected cell companies were created to be impermeable. The cell is a limited liability entity inside an external limited liability wrapper and as yet no one knows how to write an effective mutual legal assistance request to crack the secrecy that they create. The Isle of Man has deliberately created legislation to facilitate abuse using these structures, and now we know that KPMG is selling it.

What is also interesting is that Accountancy Age asked the big accounting firms to respond to criticism that they are undermining governments and regulators by working with offshore tax havens and noted that:

Firms are reluctant to speak on the record but privately argue that they work within complicated tax rules to offer rich individuals or multinational companies a chance to plan their finances more effectively, thereby minimising their tax bills.

Tax experts stress that there is a crucial difference between giving advice on legal tax avoidance and illegal tax evasion often involving money laundering which has given offshore centres a bad reputation.

One senior tax partner at a Big Four accounting firm, who asks not to be named, plays down the importance of offshore practices to Big Four accounting firms, saying his firm's offshore practice is about the same size as its Bristol office.

There are two things to say: it is absolutely ludicrous to say that any one of the big four firm's offshore practices is only the same size as its Bristol office. Either the partner in question does not understand what their offshore offices are or all these firms are maintaining an enormously expensive presence in a large range of offshore locations for almost no business. I'll plump for the first explanation.

Secondly, isn't it amazing that they will not defend their practice? Why are they ashamed? If it is as justifiable as they claim why won't they go on the record? Candidly, I don't believe them. And the abuse that KPMG is undertaking through protected cell companies in the Isle of Man proves the point: we cannot trust these locations and most of all we cannot trust the firms who abuse these locations and their local populations, bringing all of them into disrepute.

That is exactly why we had to end tax haven abuse, now.