The government has dismissed a proposal from church leaders for companies that avoid paying UK taxes by routing “huge profits” through tax havens to be barred from taxpayer-funded coronavirus bailouts and support packages.

Senior members of the clergy including the former archbishop of Canterbury Rowan Williams said that while vulnerable people were “paying the price” of an underfunded and unprepared NHS, “some large corporations continue to avoid responsibility, making huge profits yet hiding their wealth in tax havens”.

They urged the UK government to follow the lead of Denmark, Poland and France in refusing to provide state support to companies registered in tax havens.

Rishi Sunak, the chancellor, was challenged in the House of Commons on Monday by the Labour MP Peter Kyle about what the government planned to do about companies that had “so aggressively avoided paying tax in this country”.

“Many of those same companies are now relying on the largesse and generosity of taxpayers in order to remain solvent in these difficult times,” said Kyle, who sits on the business, energy and industrial strategy committee. “As the chancellor starts to plan for the recovery economy, will he take this opportunity to have conversations with those companies to make sure that when we do recover they play a much fuller part in our economy going forward? Let’s aim for not business as normal when we get back from this crisis, let’s aim for business as better.”

Sunak said it was important that businesses act responsibly, but he did not set out any plans to bar tax-avoiding firms from state bailouts or the furlough scheme. “We are all in this together,” he said. “It is right that during this process people act responsibly, and that is something I have urged all businesses to do.”

A spokesperson for the Treasury said: “The aim of all our schemes is to support individuals and companies in the UK, and that is what they are doing, with millions benefiting from our grants, loans and the furloughing scheme.

“HMRC has robust tools to challenge businesses who avoid paying their fair share of tax. That is the right way to challenge avoidance, not by denying support to British workers who pay their taxes and would otherwise lose their jobs.”

Dear European colleagues!



In Denmark we made a simple rule: If companies use tax havens, they don’t get corona support from the government. Maybe something worth copying in your country?



Listen to my Danish colleague @jacobmark_sf here. #covid19 pic.twitter.com/XrGdtDQ3Dc — Margrete Auken #FBPE (@MargreteAuken) April 22, 2020

A tax-haven-based pub and restaurant chain has taken advantage of the government’s coronavirus job retention scheme to furlough 16,500 staff. Stonegate, which is registered at PO Box 2681, Cricket Square, Grand Cayman, Cayman Islands, owns the chains Slug & Lettuce, Yates and Walkabout.

A spokesperson for Stonegate Pub Company said: “Stonegate is a UK business, located in Luton, which pays its entire tax obligations in the UK including corporation tax, employee tax and VAT. Last year Stonegate paid over £300m in tax in the UK. As a UK business, fully paying UK tax, we have every right to access government assistance such as the furloughing support for our employees whilst our pubs are unable to trade due to Covid.”

The church leaders said in their letter published in the Times: “During this crisis many of the most vulnerable people in our society are paying the price for a health and welfare system woefully unprepared for an epidemic. Meanwhile, some large corporations continue to avoid responsibility, making huge profits yet hiding their wealth in tax havens.

“More than 80% of the British public believe that legal tax avoidance is morally wrong. This crisis demonstrates why they are right. Today at least $8tn [£6.4tn] sits offshore, with its wealthy owners hiding from their tax and social responsibilities. Developing countries are deprived of up to $400bn every year by tax dodging.”

The letter was organised by the Church Action for Tax Justice campaign group and was signed by the Rev Dr Barbara Glasson, president of the Methodist Conference, the Rev David Mayne, moderator of the Baptist Union Council, and representatives from the United Reformed Church and Quaker movement.

We can start reshaping the post crisis economy now by demanding no company using tax havens should receive any government bailout assistance until they demonstrate to HMRC they they are ending this practice. #SayNotoTaxDodgers https://t.co/jnPgrKKr6k — John McDonnell MP (@johnmcdonnellMP) April 24, 2020

John McDonnell, the former shadow chancellor, said: “We can start reshaping the post-crisis economy now by demanding no company using tax havens should receive any government bailout assistance until they demonstrate to HMRC they are ending this practice.”

France’s finance minister, Bruno Le Maire, has barred all companies registered in tax havens from applying for support from his country’s €110bn (£96bn) rescue package. “If your head office is located in a tax haven, it is obvious that you cannot benefit from public support,” he said.

Rune Lund, a Danish MP and Denmark’s parliamentary tax spokesman, said: “When we spend billions of taxpayers’ money on saving companies and jobs, they need to go to that purpose and not get sent to a tax haven on the other side of the world.”

Sir Richard Branson’s plea for the government to lend his Virgin Atlantic airline £500m has attracted considerable public and political criticism because he lives in the tax-free British Virgin Islands and has not paid personal UK taxes in 14 years. Branson is the UK’s seventh richest person, with an estimated £4.7bn fortune.

The letter does not name Virgin Atlantic or Branson, who owns 51% of the airline via his Virgin Group company. Virgin Atlantic is registered in the UK, but Branson’s personal holding company, Virgin Group Holdings Ltd, is registered in the British Virgin Islands where there are no taxes. A spokesman for Branson declined to comment on the letter.