I was amused to read responses from the Isle of Man to Alastair darling's appropriate comments about the place before the Treasury Select Committee on Monday. The Isle of Man says:
rather than being a refuge for those wishing to avoid paying UK tax, it has looked to provide just regulation and a competitive commercial environment, as well as play its part in the fight against money laundering and tax evasion.
That is pure bunkum. Read Carl Levin's report on the place. It's a place where professionals turn a blind eye, as I describe in Creating Turmoil and Finding the Secrecy World.
Apparently:
Isle of Man chief minister Tony Brown described Darling's comments as "unfortunate", adding the UK has a "constitutional responsibility" to represent it internationally.
and added
"We have a good relationship with the UK and are a major contributor, via the City of London, to their economy."
Not half as good a contributor as we are to the Isle of Man though, given that the UK literally gifts the Isle of Man government more than half its annual income each year, a subsidy we provide so that it can operate as a tax haven.
Now that is very good reason why we should re-examine our relationship with the place. We could sink it by simply withdrawing our support. Maybe that's one for the Pre-Budget Report in these cash strapped times?
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If the England didn’t want to fund the IOM, perhaps they shouldn’t have schemed to ensure they could purchase it in the first place.
The UK have destroyed the IOM fishing fleets and now you want them to destroy their economy too.
The English are hypocrites when talking out tax havens, as are the US with Delaware.
Maybe it’s time to lead by example.
I call for the UK to lead by example.
The US too.
But we don’t excuse all murderers when we fail to capture one
The same is true of tax havens
Except proper tax avoidance is not illegal, and anyone can try to minimise there tax if the laws allow. Infact it’s their fundamental right to do so.
I strongly disagree that it is the offshore trust company to ensure that it’s clients are being tax compliant in their own country of residence or citizenship (in the case of the US). After all most of there countries rely on Self Assessment.
And mostly all reputable offshore FC’s have tax treaties and information sharing with onshore countries when they request it as well as having stronger Due diligence and more regulation governing even opening accounts onshore. Hell you can open a Delaware bank account via the internet with little verification.
Of course Cayman is one of the few countires that don’t recognise income and CG tax evasion as a crime, as it does not exist there. Dual criminality, after all the US have never arrested a Caymanian for Gambling in Vegas, but it is illegal for them to do so under Cayman Laws.
I think this is a very unfair and arrogant stance you take here. The report you mention by Carl Levine takes a look at an example of a rich family abusing offshore trusts to avoid huge amounts of tax. I ask you this: why should honest depositors in Isle of Man be compared with such individuals and why should they suffer as a result?
I have been a saver in UK for many years, working hard and paying tax at 40% year-on-year. I then retired overseas and had every right to enjoy the fruits of my efforts. Can you tell me where I have done anything wrong, in putting my hard-earned savings in an Isle of Man bank? Is it not reasonable for any person to try to minimise one’s tax position?
Let’s see, what were my other options? Put my savings in an Asian bank where I now live, earning 0.5% interest, and with no chance of retaining them in pounds Sterling? Or open an account in Singapore? That’s no different to me opening an account in Isle of Man. Ok, alternatively I could have deposited them in UK, but why pay an unnecessary tax? And why did my IFA advice me to use Isle of Man? Was he advocating tax avoidance too?
Remember this: the tax on the interest of all honest British-resident savers in Isle of Man is reported back to their own country. I don’t know why you have an axe to grind about Isle of Man, but I am deeply insulted by your arrogant, accusing article and by the look of your pasty-white superior and egotistical pen-pusher accountant’s face, you deserve to have someone put you in your place. You clearly don’t have the slightest understanding of what it’s like to bring yourself up from an underprivileged background, work hard and make a success of your life. I hope you have chance to reflect on the stance your article takes.
What is wrong with trying to mitigate tax liability, on legal basis?
The Isle of Man provides banking to many British expatriates who do not have a liability to pay UK tax. What are you suggesting – paying an unnecessary tax in UK?
I totally agree with Maureen above – it seems that you definitely have issues with the Isle of Man which start beyond its tax haven status.
Personally speaking, I am from the Isle of Man and I work in an offshore Bank. I know from experience that it very difficult for people from the US to open accounts even if their motives are pure. Don’t act so high and mighty – if the Isle of Man can afford to be a tax haven then why not?
Some of us have the luck to live on such a wonderful island – but now others can enjoy the freedom from unnecessary tax as well – who are you to judge and begrudge this?
Dear Mrs Jones
As I have said elsewhere on the site today, personal criticism does really not help your case.
Of course you are entitled to put your money in the Isle of Man, if you so wish. I do however sincerely hope that you pay your tax in the country in which you are resident. Most countries in the world require a person to pay tax on their worldwide income. Indeed, the Isle of Man requires that of its own citizens. I would hate to think that you have become an inadvertent tax evader by using of the Isle of Man. Just because it does not charge tax does not mean you enjoy tax-free income elsewhere.
But if that is the case then you are a complete liberty to place your money when you wish. but if you happen to lose it because the Isle of Man is able to protect it please do not then complain. Might I suggest that the phrase ‘caveat emptor’ should apply to anyone who wishes to place their funds in a location which is known to facilitate tax evasion and abuse of the sort that Sen Carl Levin has drawn attention to?
As your comments on tax avoidance – please see my response here
http://www.taxresearch.org.uk/Blog/2007/03/18/the-uk-paying-the-isle-of-man-to-be-a-tax-haven/#comment-512897
Richard
PS Please also get your facts right: the Isle of Man deliberately ensured that British taxpayers do not need to have interest that they earn in the Isle of Man reported to HM Revenue and Customs. The only reason for it providing the tax withholding facility was, I suggest, to support those who wished to evade their obligation to the government of the United Kingdom and other European states to pay tax in the countries in which it was owed. Since the EU savings tax directive was deliberately and Sony aimed at tax evasion no other explanation is possible.
Again a biased view.
Yes the IoM does give the withholding tax option, but this is currently 20%, the same amount as is witheld in the UK. It will shortly rise to 35%, so more than is withheld in the UK.
So how having deposits in the Isle of Man benefits tax avoidance when you will have 35% decucted is beyond me.
Quite simply the UK are trying to deflect blame for the collapse of KSF IoM on to the Isle of Man when the simple fact is the bank collasped as the UK froze its deposits in London.
They then say the IoM regulation and financial structure is not good enough. Well I ask you this. The IoM has had one bank go to the wall, and that wholly due to UK action. How many banks have gone in the UK? Well Northern Rock and Bradford and Bingley have gone. Then RBS and HBOS would have gone too if the UK government did pump billions of pounds in to them.
I think the UK should be looking closer to home, for faults as that is where all the banks seem to be going bankrupt, so maybe it is its regulation that is not up to much
Ally
All you manage to shows how little you understand that taxation.
The tax withheld is a payment on account, it is not meant to represent the final liability owing to which it has no relationship.
so, having tax deducted at 35% in the Isle of Man will not cancel the tax liability of the person who owns tax at 45% in the UK, as will be the case in a year or two. they will still owe an additional 10% tax in the UK. Right now they will owe an additional 5% if they are a top rate taxpayer. if they do not pay that they will have committed tax evasion in the UK and your refusal to exchange information with the UK will have directly and deliberately facilitated that process, for which the Isle of Man is culpable.
As to your comments on bank failures in the UK, and your comparison with the Isle of Man, this is, I must say, is laughable. You don’t have banks: you have branches of banks. The comparison is in the circumstances quite absurd.
Richard
Maybe if you UK didn’t have such stupid tax laws your residents would not feel the need to Bank in the Isle of Man. I say the Uk and IOM cut all ties and go separate ways. The Isle of Man Government can raise taxes to make up some of the money lost. Its worth it to get total independance.
From IOM Today website
THE UK is not out to attack our tax position.
Treasury Minister Allan Bell says he has returned with ‘some reassurance’ from a meeting in London with City Minister Lord Myners and Justice Minister Lord Bach to clarify the UK Government’s plans to review the Crown Dependencies and Overseas Territories.
He said the peers assured him that the review will not consider our constitutional relationship or tax matters. Instead, it will focus on our ability to withstand the pressures of global economic turmoil.
Speaking at a press conference today (Friday), Mr Bell said: ‘They gave a reassurance that they don’t intend in any way to review our constitutional relationship or our taxation.
‘The review will look at the financial stability of smaller jurisdictions to ensure their economies are robust enough to withstand economic turmoil. It will involve financial supervision and transparency and our ability to manage financial crises as they arise.
‘It will not interfere with our constitutional position or our ability to set our own tax rates.
The final terms of reference for the review have yet to be agreed.
UK Chancellor Alistair Darling’s pre-Budget report, unveiled earlier this week, refers to the need to review the ‘long-term opportunities and challenges for the UK’s Crown dependencies and overseas territories as financial centres’.
And it specifically includes fiscal arrangements as an area that will be covered.
But Mr Bell said the final terms of reference had yet to be agreed and the Manx Government had proposed some amendments.
He said: ‘We went down with an open mind to find out their true intentions as these weren’t very clear in Alistair Darling’s statement. I think that the information we were given by both Lord Bach and Lord Myners has given some reassurance as to the true intentions of this exercise.
‘The final terms of reference have yet to be agreed. We’ve asked for a number of amendments to the proposals and those are now being considered.
‘We welcome this move from the UK Government. It gives us a great opportunity to prove what a well-regulated and transparent jurisdiction the Island is.’
Todd
I am sure that the report is correct. there is no reason whatsoever for the UK to review your constitutional row arrangements, and it would be quite inappropriate for us to suggest your tax rates. They are yours to set.
In saying so the UK is living by the proper standards of international conduct: it is not seeking to interfere in another country’s affairs.
But of course, this is entirely relevant to the review, as also is your compliance or non-compliance with any international regulatory regime.
The real issues are these:
1) why do you seek to interfere in the U.K.’s affairs by offering tax arrangements that seek to undermine our revenues?
2) why do you do the same to other countries?
3) why should the UK allow you to do this when other countries will undoubtedly expect us to bail you ( out in turn, them) out when your shenanigans fail?
Your obsession with micro detail form ticking has nothing to do with this. We are not interested in systems failures here. We are interested in systemic failure here. They are not the same thing.
You should be worried
Richard
errr are you going to take back all you english at the same time
good coz the manx may be able to buy a house then
the money goes to the enlish that live here not the manx of which there are few
in fact why dont you find that out yourself before making the comments you have about the iom being subsidised find out how many of the population were born here i think you will be shocked at the findings its probably about 15% if that