The British government has been accused of being weak on tax avoidance after failing to block the EU from taking the first step in naming and shaming its overseas territories in a tax haven blacklist.

Ministers in recent weeks fought to prevent Brussels from sending of letters informing 12 countries that they would be listed unless they promised to change their tax rules. The final EU blacklist is due to be published on 5 December.

The correspondence was eventually sent to the British overseas territories, but only following a ruling by members states’ experts sitting on a European council code of conduct group, which trumped the initial British protests.

In response to the development, the leader of the Liberal Democrats, Vince Cable, accused Downing Street of impoverishing the Treasury to protect tax havens used by the super-rich to hide their cash.

Cable said Theresa May and David Cameron, under whom he served as business secretary, had been consistently weak in clamping down on the overseas territories.

He said: “There is little doubt that systematic tax avoidance is causing significant damage to the British revenue position in the budget. Why on earth is the British government blocking sensible, practical attempts by the European Union to stop predatory behaviour by some of its member states?”

The former cabinet minister argued there was a long history of the British government “dragging its heels” when it came to the tax practices of its own overseas territories – claiming he witnessed the lack of action when he was in the coalition government.

“Some Caribbean islands in particular were operating to very poor standards, sometimes to the cost of British government,” the former business secretary said. Cable added that the government had a range of sanctions from barring companies registered in tax havens from public service contracts all the way up to direct rule.

“When we brought in the register, David Cameron himself got the overseas territories to come to the UK to try to persuade them to follow the British model, but they didn’t and nothing was done to enforce it,” Cable said.

A British government spokesman said: “The UK is at the forefront of tackling avoidance and ensuring tax transparency. We support the development of a blacklist and are working with our European partners. Our goal is to finalise a common EU blacklist by the end of 2017.”

Brussels wrote to 41 countries at the end of October informing them that they would be blacklisted unless they promised to change their tax rules. Further letters were sent once the British “blockage”, as it was described by one diplomat, was removed.

The UK has consistently argued that the overseas territories such as Bermuda, the Isle of Man and the Cayman Islands should not be named and shamed for having a 0% corporate tax rate, despite the recent outcry over tax avoidance and evasion by the super rich.

Last year, the Observer revealed that the Treasury had argued that inclusion of British overseas territories, including the territory through which Google funnelled its billions of profits, on the blacklist would be “misleading and deeply unhelpful”.

A commission official declined to comment on the British position. “The list should be finalised next month,” the official said. “Member states are working to deliver the first EU blacklist in December, as planned based on the process launched by the commission in January 2016.

“The vast majority of non-EU jurisdictions that have been contacted by the EU during the screening process have engaged in dialogue with us on the possible issues identified. This is encouraging.

“However, we can confirm that member states in the code of conduct group have written to a number of jurisdictions regarding deficiencies that were identified during the screening phase.

“We said that the EU would proactively engage with the relevant jurisdictions throughout the listing process, and that is what member states are doing.”

The UK is also one of a few member states resisting improvements to the anti-money laundering rules to reveal the real “beneficial” owners behind companies and trusts in the EU.

The changes would oblige EU member states to operate fully public registers disclosing the “beneficial ownership” of trusts. The UK claims it would be an infringement of privacy to reveal the beneficiaries of trusts.

Laure Brillaud, from Transparency International, said: “The Paradise Papers have shown that trusts are an essential piece of the offshore puzzle. A new legislation that would not fully cover and increase transparency on trusts doing business in the EU would miss the whole point.

“Member states, including those on their way out, must take the opportunity of the new EU anti-money laundering directive to change the rules of the game.

“Any countries which attempt to block progress on this will only be proving that they are in favour of the status quo of secrecy which allows wealth to be hidden offshore.”