COMMONS

Committee asks to see tax bill on £12bn frozen Libyan assets

09 April 2019

The Northern Ireland Affairs Committee is asking why, if tax is being collected from frozen Libyan assets, the Government is not creating a reparations fund for victims of IRA attacks assisted by the Gaddafi regime pending payment by the Libyan government in its follow-up report on HM Government support for UK victims of IRA attacks that used Gaddafi-supplied Semtex and weapons.

The report

The Committee's report follows a chain of revealing correspondence with the FCO, the Treasury and HMRC which indicates that the Government could be levying significant amounts of tax on frozen Libyan assets in the UK. Frozen under UN sanction in 2011, Libyan assets in the UK are now worth approximately £12 billion. As yet, victims of IRA attacks that used Gaddafi supplied Semtex, such as the 1996 Docklands bombing, have not received compensation from Libya.

The report notes that the Gaddafi regime's supply of several shipments of Semtex to the Provisional IRA in the mid-1980s led to a deadly campaign of bombings across the UK. The Government has committed to take a more "visibly proactive approach" to securing compensation for the victims of these attacks, however the Committee argues that "continued inaction" has led to time running out for many victims. The report recommends that the Government:

  • Enter into direct negotiations with the Libyan authorities to seek a compensation deal
  • Reveal whether any tax, and if so how much, is collected on frozen Libyan assets
  • Expand the remit of the new specialist adviser to ensure an active role in seeking and securing compensation for victims
  • Disclose for what, and to whom, licences to release funds were issued
  • Explain why the Government has chosen not to finance a victims' reparations fund if tax is being collected.

Chair's comments

Commenting on the report, Chair of the Committee Dr Andrew Murrison MP said:

"My Committee is disappointed our Government has been less successful in securing compensation for UK victims of Gaddafi sponsored IRA Semtex attacks than other governments have been for their nationals.

We now find that HMRC may have been scooping up big tax receipts from frozen Libyan assets, a small part of which could help victims pending reparations being negotiated with the Libyan government".

The UK Government's role in seeking compensation

While several other countries, such as Germany, France and the US, have secured compensation from the Gaddafi regime for victims of attacks, the UK Government has consistently held that it is not its responsibility to secure compensation for victims of Libyan Semtex, and that victims should pursue cases with the Libyan authorities individually. The Committee brands this approach as "untenable" and urges the Government to enter into direct negotiations with the Libyan authorities to seek a compensation deal.

The Government has announced the appointment of a specialist adviser to calculate the amount of compensation due to victims of Gaddafi-sponsored terror attacks, however FCO Ministers have said that the adviser will not be responsible for assisting victims in securing such compensation. The Committee argues this is not sufficient, and recommends that the adviser play an active role in securing compensation for victims and update the Committee regularly on their progress.

Chair's comments 

Committee Chair, Dr Andrew Murrison MP said:

"Successive governments have failed to secure adequate compensation for victims. Ministers must adopt an active approach to seeking compensation by empowering the new specialist adviser to assist in direct negotiations with Libyan authorities."

Uncertainty around taxable status of frozen Libyan assets

Following the collapse of the Gaddafi regime, a UN sanction froze Libyan assets around the world. Such assets based in the UK, which include cash, property and securities are now worth £12 billion. Correspondence between the Chair, the FCO and the Treasury revealed that the assets are not exempt from tax, however the Government was opaque in its response to questions on how much tax had been collected.

Additionally, the Government has revealed that several licences have been issued to make funds or economic resources from the Libyan assets available. The Committee is critical of the Government’s refusal to explain for what, and to whom, the licences were issued.

The Committee calls on the Government to reveal whether it collects tax on the assets, how much has been collected, and details of the licences. The Committee also asks the Government to explain why, if tax is being collected, receipts are not being used to finance a victims’ reparations fund.

Chair's comments 

Committee Chair, Dr Andrew Murrison MP said:

"For victims, the possibility that the Government has been collecting tax on frozen Libyan assets and making funds available to others will make for difficult reading. It is essential that the Government adopts a transparent approach by revealing what tax has been collected, and what licences were issued to make funds available. If the Government is collecting tax, I would encourage it to use some of the proceeds to finance a compensation fund for victims pending extraction of compensation from the Libyan government."

Further information

Image: treasury

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