Britain's record under scrutiny

Ten of the OECD's list of 35 tax havens are UK overseas territories or dependencies of the British Crown.

Britain's crown dependencies consist of the Isle of Man, Jersey and Guernsey. All three are independently administered and do not form part of the UK. However, they are possessions of the British Crown and not sovereign nations. They are treated as part of the UK for British nationality law, and the British Government is responsible for their defence and international representation. The power to pass laws affecting the islands rests with their own legislative assemblies.

Parliament in London retains the right to legislate for the islands against their will, though this power is rarely used. Many key officials are also appointed by the British Government. As a result, the exact nature of the relationship between the Crown dependencies and the UK is hard to pinpoint. However, the 1973 Kilbrandon report concluded that the UK Government is ultimately responsible for the islands' governance. The UK's Ministry of Justice now has responsibility for them.

The 14 British overseas territories are also under the sovereignty of the UK. The name came into being with the British Overseas Territories Act 2002, which granted UK citizenship to citizens of any of the territories, which include the British Virgin Islands, Cayman Islands and Gibraltar. The head of state is the Queen, who generally appoints a governor as her representative.

UK sovereignty was recently demonstrated in relation to another overseas territory, the Turks and Caicos Islands. The British Government revealed plans to take control of the islands, due to suspicion of systematic corruption. The Foreign Office said parts of the islands' constitution would need to be suspended. The British Government has the constitutional right to amend or suspend the laws allowing much of the offshore tax business. The question is whether it has the will to do so.

- OBSERVER