Libya-IRA compensation: Treasury refuses to say if it is taking tax on frozen assets

In a recent oral evidence session, MPs on the Northern Ireland Affairs Committee quizzed Minister of State for the Middle East and North Africa, Alastair Burt, on whether government is taxing the Libya assets, which are frozen under UN sanction.

Mr Burt was unable to answer the questions but said he would make inquiries and respond in writing. However, the committee says his written answer still fails to answer the question.

The News Letter approached the Treasury for clarification, but it too failed to say whether it is collecting tax on the Gaddafi-linked assets.

Jonathan Ganesh, who still suffers extensive injuries from being caught in the 1996 IRA bombing of Canary Wharf in London, said he was shocked by the government’s response.

“The fact that neither the Foreign Office nor Treasury is divulging this information leaves me extremely suspicious, due to their lack of openness and transparency,” said the chair of the Dockland Victims Association.

“The victims desperately need financial support.”

Last year the committee published a scathing report, accusing successive governments of failing to act for the victims, while noting that Germany, France and the US had all secured compensation for their own victims of Libyan terrorism.

The MPs had quizzed Mr Burt on whether frozen Libyan assets were subject to UK tax liability and whether HM Treasury has ever released funds or the interest or dividends from these assets.

In his letter, Mr Burt has now told them that HM Treasury “may grant permission for frozen funds to be released”.

However, the committee said “he did not answer the crucial question of whether HM Treasury has in fact issued licenses for funds or interest accrued from the frozen Libyan assets to be released”.

Mr Burt also said that “designated persons are not exempt from tax as a consequence of having their assets frozen”.

Committee chair, Dr Andrew Murrison MP, responded: “The government said it would take a ‘visibly proactive’ approach to securing compensation for victims of IRA Semtex attacks. We welcome that, but this letter prompts more questions than it gives answers.

“It is inconceivable that the government could profit from frozen Libyan assets but not use receipts to compensate victims. Compensation is needed now.” His committee is now pressing the chancellor for answers.

The Treasury told the News Letter: “We recognise the importance of this issue and will respond to the committee in due course.”

The UN’s Libya Sanctions Committee has told the News Letter that it decided on Monday that interest and dividends on frozen Libyan assets worldwide should also be frozen under the same measure.

It is understood to be unlikely that the UN will take retrospective action against any breaches.

A spokesman for the Libyan Investment Authority told the News Letter that “no dividends or interest has gone from its frozen assets held in the UK”.

Libyan Semtex was used in countless IRA bombings, including the attack in Warrington in 1993.