The amount of tax lost to the Treasury from companies using avoidance techniques and offshore tax havens is less than £2 billion — a small fraction of previous estimates, according to Deloitte, the accountant.

Its estimate of the pot of money slipping past HM Revenue and Customs emerges in a Treasury report into offshore tax havens. The report, British Offshore Financial Centres, calls on Britain’s fiscal havens to raise taxes to weather the current recession but, unexpectedly, it also outlines the important role played by the Crown Dependencies in funding banks on the UK mainland.

The report emerges after signs of distress within some UK offshore tax havens, including the Cayman Islands, which requested an emergency loan from the Treasury of £278 million to meet salary bills for government employees.

According to the Treasury report, written by Sir Michael Foot, a former director of the Bank of England, and recently banking inspector in the Bahamas, Crown Dependencies make a “significant contribution to the liquidity of the UK market”.

In the second quarter of this year, they provided net funds to banks in the UK totalling $323 billion (£195 billion), of which $218 billion came from Jersey, $74 billion from Guernsey and $40 billion from the Isle of Man.

Typically, UK banks “have significant deposit-gathering capacity in the Crown Dependencies,” which funnel funds to their parents in the UK, which manage and invest the money.

Ronnie Ludwig, a partner at Saffery Champness, the accountant, said there was a symbiotic relationship between the UK and its overseas territories. “Crown Dependencies route significant capital flows into Britain,” he said.

Low tax is a factor, he said, for businesses using Crown Dependencies, but most depositors are companies doing business in difficult locations, such as Russia, and they choose to use states such as Jersey or Guernsey for asset protection. “The funds are reinvested in British banks,” he said.

Sir Michael’s report also highlights research commissioned by the Treasury from Deloitte, also published yesterday, which concludes that tax avoidance by UK corporates using nine UK Crown Dependencies and Overseas Territories is less than was previously believed.

In its report, Deloitte dissects research conducted last year by the TUC, which concluded that tax avoidance by the 50 largest companies in the FTSE 100 was depriving the Treasury of £11.8 billion. The “tax gap” revealed by the TUC’s analysis, which looked at the reported profits of the companies and the amount of tax paid, was mostly due to differences in the accounting treatment of profit for taxation purposes, which were intended under the tax rules.

“We estimate the total UK corporation tax potentially lost to avoidance activities to be up to £2 billion per annum, although it could be much lower,” said Deloitte.

The nine Crown Dependencies and Overseas Territories face difficult decisions, Sir Michael says in the report, and he calls on them to diversify their tax base to maximise revenue.

“Some now face difficult decisions and will need to look afresh at options for controlling public expenditure and increasing revenue,” he says.

Geoff Cook, chief executive of Jersey Finance, said he welcomed the report. The economic downturn has left Jersey with a budget deficit of about £60 million, but Mr Cook said that the island’s Government had managed to build up long-term reserves of £582 million.

In addition, Jersey was introducing a new sales tax of 3 per cent, which he said would fill most of the gap in the state’s budget.

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