Prime Minister David Cameron under pressure over tax havens

Britain should consider imposing "direct rule" on its overseas territories and dependencies if they do not comply with UK tax law, Labour Party leader Jeremy Corbyn has said.

A huge data leak from Panama-based Mossack Fonseca showed the law firm registered more than 100,000 secret firms to the British Virgin Islands.

Mr Corbyn said their governments must understand the "anger" of Britons.

Downing Street said the UK was "ahead of the pack" on tax transparency.

Eleven million leaked documents showed how Mossack Fonseca clients were able to launder money, dodge sanctions and avoid tax - the law firm says it has operated beyond reproach for 40 years.

There are links to 12 current or former heads of state in the data, including dictators accused of looting their own countries.

Crowds gathering outside Iceland's parliament demanding Prime Minister Sigmundur Gunnlaugsson step down over allegations he concealed investments in an offshore company

Close relatives of seven current or former Chinese leaders have been found to have links to offshore firms

The Australian Tax Office (ATO) is investigating more than 800 individual taxpayers, all residents of Australia

The US Department of Justice is reviewing the leaked documents to look for evidence of corruption that could be prosecuted in the US, the Wall Street Journal reports

France and Spain are investigating money laundering exposed by the leaks among their resident taxpayers

Panama President Juan Carlos Varela has said his government has "zero tolerance" for illicit financial activities and would co-operate vigorously with any judicial investigation in any country

Leaked files also mention Mr Cameron's late father, Ian, who used one of the most secretive tools of the offshore trade after he helped set up a fund for investors.

Downing Street sources told the BBC Mr Cameron did not have any shares in Blairmore Holdings, the Panama-based company his late father Ian helped set up in 1982.

The sources are not saying that other members of the Cameron family do not own shares in the offshore firm, however.

A number of British overseas territories and Crown dependencies are named in the files raising the question of what the UK can do about them.

Asked if direct rule was the solution, Mr Corbyn said: "If the local government is simply going to condone this level of brass badge companies and tax avoidance and tax evasion of money that has been made in Britain... then that's something that has to be considered.

"There has to be an observance of UK tax law in those places,

If they've become a place for systemic evasion and short-changing of the public in this country then something has to be done about it. Either those governments comply or a next step has to be taken.

He said if the government decided to impose direct rule, it could be done "almost immediately".

Former Business Secretary Vince Cable, a Liberal Democrat, said: "We can't send gunboats these days but we can take the small territories under direct rule."

For three years, the UK government imposed direct rule over the Turks and Caicos Islands after evidence was found of widespread corruption among the ruling elite. It was only after it implemented rules around sharing tax information that home rule was restored in 2012.

Two broad qualifications for being a tax haven are to have a low or zero rate of income tax and guarantee the rich a cloak of secrecy they would not receive in their own country.

They matter because of lost revenue - it is estimated that UK tax authorities could be losing up to £7.2bn a year from avoidance and evasion.

Dominic Grieve, former Conservative attorney general, said removing self governance in overseas territories was a "bit of a nuclear option" and the consequences on the people and their economy needed careful consideration.

If havens in overseas territories were shut down, people would go elsewhere where there might be far fewer regulations which would encourage the money laundering and criminality we want to suppress, he told BBC Radio 4's Today programme.

Geoffrey Robertson QC, an international human rights lawyer, said: "The British Empire has shrunk largely to a number of tax havens - treasure islands, as they are known.

"Britain is at the heart - the hub - of international tax avoidance by allowing these little remnants of empire to have tax secrecy laws and enable offshore trusts and offshore companies to operate without transparency.

"These little countries are endowed by international law with sovereignty. They can set up their own regimes which promise utter secrecy and have no transparency.

He said change could come with "some form of international convention" to require transparency, lawyers reconsidering their ethics and an international enforcement body able to inquire, inspect and punish.

Since 2009, many attempts have been made to crack down on abuses. More than 700 tax transparency deals have been signed globally.

Places including Switzerland, the Channel Islands and Luxembourg have tightened the rules, but others like Panama and the British Virgin Islands have been criticised for not doing enough.

Next month, Mr Cameron will chair an international summit in London on tax avoidance and evasion, where the use of offshore tax havens to escape scrutiny will be high on the agenda.