(BBC) The UK’s Overseas Territories and Crown Dependencies have been told to improve standards of regulation, and find new methods of raising tax.

The UK wants to reduce the amount of tax revenue still going overseas.

Michael Foot, the report’s author, said that several jurisdictions had “a good story to tell, but others had more to do on regulation and tackling financial crime”.

He investigated the economies of Britain’s Caribbean territories – Anguilla, Bermuda, the British Virgin Islands, the Cayman Islands and the Turks and Caicos Islands.

Also reviewed were Bermuda, Gibraltar, the Channel Islands of Guernsey and Jersey and the Isle of Man. In his report, Mr Foot encourages them to find ways of diversifying their tax bases.

He does not specify the action that should be taken in every case, but it could include raising significant extra revenue through income tax, value-added taxes, a consumption tax and corporation tax. The British Overseas Territories and Crown Dependencies have sovereignty over their own tax affairs. Many will fiercely defend their reputation as low-tax economies.

Caribbean tax centres have traditionally used their rock-bottom rates to attract thousands of multinational corporations, hedge funds, and rich clients. The nine British territories comprise nearly two-thirds of the offshore market, according to the report, which noted that the Caymans and Bermuda also handle large chunks of the US overnight banking and American reinsurance business.

But Mr Foot said that many of the territories were running out of money as tourism and finance withered away amid the worldwide economic meltdown.

Great strain

The Turks and Caicos have already exhausted their government reserves, while in Anguilla reserves are forecast to run dry by the end of the year, the report said.

Leaders of the G20 group of leading economies have made repeated calls for action to curtail business in “tax havens”, and close “loopholes”.