I was interested in this comment on the blog:
As a recent resident of Guernsey and somebody involved in setting up a trust in Jersey I can say that both jurisdictions are active centres of tax evasion.
They do this through the use of "fictitious" companies under changed ( local law not UK )trust law allowing the roles of the person who establishes the trust and the beneficiary of the trust to be the same person. They even allow the administrator ( whom is really the beneficiary -again through the "fake company device" to manage the trust.
This is a total breach of the trust principles that the UK operates under to allow these offshore tax havens to run.
These companies then have minutes produced for AGM's that never took place and fake meetings that are typed up by the Trust companies and held as evidence against audit. I was involved with this it is fact .
It is fraud and tax evasion against the UK by islands whom claim to be British and yet do even allow British people the right of residence . Time to redress this injustice and stop them bleeding our income.
The email address suggests the comment does originate as suggested.
The law referred to is detailed here.
The evidence (copies of emails) showing that Jersey knows this law is abusive is here.
Everything Jersey says about not wanting tax evading business is untrue — as recently as 2006 it set out to pass law to attract it.
That is why it is a secrecy jurisdiction.
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Starting to stretch it a bit aren’t we Richard? I mean relying on the testimony of someone you don’t know but portraying it as truth because “the email address suggests the comment does originate as suggested”. Someone who has been involved in the setting up of one trust…doesn’t sound like he is been working very long in that area or have much experience of it. If you were giving this article to the Guardian would it get through their internal legals? I doubt it.
Anyway, if indeed the poster of that comment exists I get the impression that he certainly is upset about something because he’s getting some of facts wrong especially with reference to residency within the Channel Islands. At no stage (as far as I am aware) have the Channel Islands declared themselves to be British mind you they do seem to be entering into alot of agreements these days so who knows eh?!
As for the practice that he is describing. Its no secret that Private Trust Companies are in operation whereby a family member can be involved as part of the process of administering a structure. There is so much information available by the licensed companies that operate in the Channel Islands and wider afield that I’m sure you’ll find it…it is openly publicised and not kept secret as perhaps a secrecy jurisdiction might do?
Anyway, back to you poster who may or may not exist. If he does exist, I would guess that as well as being upset about something he is probably a junior staff member only involved in part of the administration process and those that are only involved in part of the process or indeed have insufficient knowledge things somethings appear differently. He does say he was involved in the setting up of one trust so he doesn’t come across as being particularly experienced. If your poster doesn’t exist then they need to tighten up a few areas of their post to make it stack up but it is a valiant first attempt.
Richard
Frankly I don’t believe this at all. I don’t believe and don’t want to believe that any regulated fiduciary services provider would operate in such a manner. But if they do, then they should be charged with tax fraud and if found guilty they should do a long jail stretch. There would be tens of dozens of highly responsible fiduciaries who would be only too happy to do the locking up, in sheer disgust that one of their peers could operate in such a manner.
That sort of thing used to happen in the 1970s and it is hard to imagine any dinosaurs still acting that way.
The big question is whether your poster reported the fiduciary concerned and, if so, what was the outcome ?
Of course Jersey doesn’t do tax evasion… 😉
Geoff Cook, chief executive of the lobby group Jersey Finance, was upset when the Channel Islands were included on the Obama administration’s tax hit-list. He argues that Jersey shares information with most jurisdictions about who owns what on the island. http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5864693.ece
this would be clearly illegal under Jersey and Guernsey law, and I know for a fact it would be prosecuted if known to the authorities. I suggest you forward the e-mail – which sounds fictitous to me – to the authorities.
“allowing the roles of the person who establishes the trust and the beneficiary of the trust to be the same person.”
So it allows the Settlor to be a Beneficiary, hey that’s the trust law in the UK to under a descetionary trust, shock horror.
I can only guess they are refering to Modern Reserved Powers laws that allow Settlors to retain powers over the trust property, (so the trust does not fail under formal sham rulings).
BUT these are taxable onshore as the onshore settlor acts as the defact trustee bringing the trust to be fully taxed onshore. Thus these are not used for tax purposes as they don’t work.
As for AGM’s, while working in the UK I came across many board minutes, say reapproving auditors that never took place and would just be sent to directors for signature.
If this individual has found tax evaision taking place I would suggest you tell him to report it to the proper authorities beofre he can be accused of facilitation or tipping off
John
You say:
Starting to stretch it a bit aren’t we Richard? I mean relying on the testimony of someone you don’t know but portraying it as truth because “the email address suggests the comment does originate as suggested”.
Come on – that means he has at least as much credibility as you.
And what he says clearly accords with the intention and foreseen outcome of Jersey law – so adding to his credibility
You and Rupert have all the credibility of the convicted murderer who, without fail say “not my son – he’s a good boy”. Honest maybe, but entirely deluded as to reality.
Richard
Paul
Nonsense!
Why would this be illegal – this sort of abuse was exactly what the Jersey Trust law of 2006 was intended to facilitate – the civil servants even said so
Please don’t misinform readers of this site
Richard
Creg
Of course this is a allowed in the UK – it is a bare trust
I hate them – but then I loath trusts
But the difference is in the UK they are detectable
Jersey, Cayman and the BVI to name a few set out to create these structures under the guidance of the Society of Truste and estate Practitioners and even if you’re the one who uses them legally it is abundantly obvious that their only real use is fraudulent.
I’ll wager 98% are used fraudulently too
And I know you can’t prove me wrong
Don’t say I can’t prove I’m right either – you’ll just prove the case for reform
Richard
Richard,
Facilitating tax evasion is illegal in Jersey and Guernsey under the Proceeds of Crime legislation. If, as your correspondent suggests, documents have been fabricated to show a fictitous position in order to facilitate tax evasion, he should go to the authorities, who will happily investigate.
If, on the other hand, what he is talking about is a settlor directed trust that has been established in accordance with internationally accepted principle, where full KYC has been obtained on the settlor, and where the structure is supported by an opinion from a respected firm of accountant’s in the settlor’s jurisdiction that it is tax compliant, then what is the problem? Tax evasion is illegal, tax avoidance is not. And the difference is crucial, because “justice”, in my book, means complying with the law and respecting the rule of law. It does not mean “everyone must do what I think”.
What is ethical is a matter for people to decide for themselves: I for one believe that not composting green waste, adultery and probably abortion are unethical. But I live in a democracy and that means I agree to follow the law and leave ethics for individuals to determine.
So, if people are acting illegally to evade tax, the Jersey and Guernsey authorities will investigate.
If people are acting legally but the result of their actions is a reduction in tax payable in their home jurisdiction, the solution is for people in that jurisdiction to lobby for change, if they think it unethical.
Richard,
Your comment to Creg beggars belief. Trusts are generally established by people so that their family wealth can be managed and administered in a professional way. People may not want one child to inherit a lot of money when they are young, or may wish to provide for their grandchildren.
The idea that 98% are fraudulent is patently absurd. I would be surprised if the figure was even 1% in Jersey and Guernsey.
Paul
I have one comment: open your eyes.
Of course trusts can be legitimate. But no one needs to use a Jersey trust to achieve the result you refer to. If they are doing so they are trying to subvert some other law in their place of residence. Most will require non-declaration of some aspect of the arrangement to achieve that effect.
As for an accountant’s opinion – not worth the paper it’s written on. PWC signed off Barclay’s tax dealings – and turned a blind eye to their repugnance. Ditto Northern Rock – and in these cases they were marginally legal.
The reality is the accountant will make assumptions in offering an opinion- including that it will be used legally.
Of course a Jersey trust established for the benefit of the settlor can be legal. The question is not that – the question is is it legal? If declaration is not subsequently made then it is not.
I think that likely. I suggest your trust companies are covering their backsides with boilerplate and that they know it.
I also suggest this – the Jersey authorities have no idea if there is evasion or not and do not ask
I am blunt – I do not accuse you of facilitating tax avodiance. I accuse you of facilitating tax evasion.
Richard
Richard
Why do you seem to think that all trust companies in the islands do not insist on full tax compliance re. the structures that they run ? You seem to infer that everybody who operates in the islands is operating a tax evading operation. They are not !!!! Some might be, and being pragmatic that must be a probability rather than a possibility, but I think you have convinced yourself that we are all running mass tax evasion businesses. That is just so far from the reality.
Richard,
All I can say is that my experiences of working with Jersey financial institutions do not reflect your assumptions of what they do and why people use them.
Although you may be astonished, tax is very rarely an issue for the people who use Jersey. Of course, they would not use Jersey if it was not tax neutral, but they are not motivated by reducing their own tax burden. What they want is stability, experience and professionalism: when your family wealth is worth billions that will always be your priority. Which is why Jersey has been focussing on the ultra high net worth market for over a decade.
If somebody is trying to evade tax, chances are they will try to evade your fees as well.
Paul
I’m sorry to be unsubtle – but I just don’t believe you
And if you believe it candidly most readers of this blog will think you either a) deluded or b) dishonest
Stability, experience and professionalism are much more readily available in London than St Helier and you guys are ludicrously expensive. In other words there is no reason to use you bar a) tax abuse b) tax evasion.
So please either open your eyes or tell the truth because all your proving yourself to be in making such ludicrous comments is naive or disengenuous. Neither lends credibility to your claims.
Richard
No Richard
Paul is neither deluded nor dishonest. I suspect he is one of the many of us in the islands who operate to far, far higher standards than in the UK. Frankly, your understanding of the business carried on today in the Channel Islands by the vast majority of us is completely inaccurate.
Richard,
If there is no reason to use us other than tax abuse, how would you explain the large proportion of litigation that arises in Jersey from trusts settled by Middle Eastern clients from jurisdictions where no taxes are payable?
You tell me why a wealthy Arab family would establish Jersey trusts. You find a tax angle there, because I can’t.
You are wasting your time arguing with Richard on this one. It is pretty darn obvious that the e-mail has been made up and that goes for most of the ramblings we hear from the TJN and ATTAC these days.
Come next week it will be back to the drawing board for them because they won’t get anything out of the G20.
And it’s always going to be more expensive getting services offshore, as they have far more onerous due dilligence work on their clients that those in London, as proven many times.
After all let us not forget London refused to partake in retrospective due dilligence on clients, when most “offshore” jurisdictions did due to it being too expensive for the London firms.
All that extra work ensuring your clients are clean and respectable does push the price of business up as you state Richard.
Of course I can imagine it will get more expensive as relying on EIL’s from say the US will have to be reviewed after the Madoff and US regulators not doing their jobs.
Rupert, Paul, Sara and Creg
Do you recall UBS swearing blind it was clean?
As for your due diligence:
1) We only have your word you do it
2) It only proves you know who is tax evading
3) There’s no evidence it stops tax evasion because there’s no evidence you report it
4) I remain convinced you know tax evasion is your core product – just as UBS did
5) You know your core product – abusive trusts – are designed to facilitate that tax evasion
6) You refuse data on public record to stop it
7) You refuse proper information exchange to stop it under the EU STD. No doubt you will fight its extension too – aimed only at tax evasion
Sorry – like UBS you are suppliers of corruption services and the ball is in your court to prove otherwise
Richard
Sara
Actually, I think it is pretty darn obvious that the email is genuine. If Richard was making it up I think he would have remembered to put the missing word “not” in the last sentence (about allowing Brits to live there)! Also, if he were making it up, it would have been far more juicy. Finally, I really don’t think that Richard needs to make up emails – he is quite busy enough, and unlike you, I do believe in his integrity.
Admittedly, the email proves nothing more than is already known, but do you think it so unlikely that there might be one person in Guernsey willing to put the boot in?
For the record – the comment came in to the blog like any other
I do see the email addresses all commentators use
I don’t use them
I think it’s genuine
Richard
Guenine or not you have to question why he is risking tipping off by telling Richard and not the proper authorities, and somone in the FS sector would know this.
As for your due dilligence questions Mr Murphy:
1)Actually the regulators audit licensed firms, and all multi-nationals will also have internal audits to ensure this is all done. and let us not forget the hurdles that need to but jumped through to be a QI, for the US
2)In our case, no-one, we actually have tax accountants in the UK, dealing with onshore benficiaries and NRI calculations and all taxes are paid and benefiaciaries and soem Settlors are tax compliant. Infact we would not even take on a reserved powers trust set up for tax evaision, to risk to international reputation is to high.
3) Strawman arguement, there is no evidence that you don’t use the expenses of this blog and travel for TJN as taxable expenses, or even overinflate these if you do to evade taxes Richard, does that mean you do it?
4)As you appear to know little about modern financial servies offshore, this surprises me little.
5) Abusive trusts? it appears from your writings that you believe all trusts are abusive, which again shows a complete lack of understanding.
for example how any reasons can you think of for starting a STAR trust in Cayman?
6)Trusts on public record? please show me a country that has this? I’m trying to find the UK Trust public register can you show me where it is?
7) avoiding EUSD, actually in Cayman we fully disclose under EUSD, pointless as it is in it’s current form.
As for J,G and IOM they probably see how full disclosure achieves little, for a lot of extra work. How many tax evaders has EUSD caught? do youhave any evidence it does work? and if EUSD wanted full compliance, why did they offer the with-holding tax option? was Jersey threatening the UK with sanctions?
Creg
I got to point 1 and fell about laughing
UBS was a QI
Richard
PS I talk to fraud investigators from all over the world and we all agree – there are only nefarious reasons for setting up STAR trusts
Richard
Sorry but you are talking utter garbage. Your posting no. 19 completely proves it beyond any doubt. If you honestly believe that what you state in posting 19 us anything like an accurate reflection of reality, then you are totally misinformed and deluded. We are not all UBS you know !
If the offshore industry as you describe was anything like that, then i can assure you that I for one wouldn’t want to work in it. It reminds me of a prominent businessman who once told me that if half of what he read about himself in the media was true then he wouldn’t want to do business with himself either.
I see a lot of rationale in many of your postings, some of which are extremely hard to disagree with, but your view of the Channel Islands and the type of business carried out here by the vast majority of operators is way off beam and as a result it totally discredits whatever sense you may state in the rest of your postings.
I have to include that your sources on the ground are completely unreliable. Maybe they also share your agenda as they certainly aren’t giving you anything like an accurate picture.
Rupert
Tell us who you really are
Issue the public demand for openness, accountability and transparency in Jersey
Publicly demand an end to the witholding option under the EU STD
Demand accounts on public record
Then I” believe you
Not until then
Richard
Richard
I regret that I am unable to disclose my identity. You only have my word for this but I am a major employer in the islands in the fiduciary business, running a totally tax compliant business. I have obligations to my partners and to my staff and it would be inappropriate for me to disclose my identity. I have a duty to lots of people while you are answerable to yourself. I know you will try to discredit me for not revealing my identity but I simply cannot do that.
However I an prepared to confirm that I am in favour of automatic exchange of information rather than withholding tax. I am in favour of greater transparency. I am in favour of the retail banks being told to leave our shores if they hide behind withholding tax instead of information exchange. I am in favour of making examples of anybody facilitating tax evasion with stiff prison sentences. I am also in favour of the retention of privacy for those who are acting lawfully and I am also on favour of legitimate tax mitigation which doesn’t rely on the facts being withheld from the taxman.
But I am not in favour of the totally pukka busineses like mine and many others being destroyed by sheer ignorance and
political agendas and by declaring us all to be crooks when we are engaged in lawful tax mitigation and estate planning. I am not in favour of being asked to have registers of trusts on public record when it isn’t required in G20 countries, ditto beneficial ownership and audited accounts of private companies. I am not in favour of people who clearly dont know that my business is typical of many others in the islands spouting such outrageous diatribe about the core business in the islands.
I am totally in favour of the islands jettisoning any business which falls short of the standards required by the modern world. If this means losing 10% or 20% of our finance sector then so be it. That view won’t be universally popular with some, and that’s another reason for preserving my anonymity.
My key gripe with you is that you have your ratios the wrong way round. I am confident from my close contacts, who often speak to me about these sensitive issues, that the “problem” business in the islands may lie between 10% and 20% of the entire industry, but no more, and that most of it is in the retail banking sector. You will insist that its the other way round, but that is totally wrong. Its miles out.
Accounts on public record? So this goes the same for all UK private companies and trusts as well does it Richard?
Talk about “do as we say, don’t do as we do”.
People are right about you guys, you really do come from another planet.
Matt
Accounts for all limited companies registered in the UK, private or public, are on public record at Companies House. I can get them. So can you.
Trusts, yes, you have a point. If we want them registered elsewhere, they must be registered here.
Richard, what’s your view on this. Should UK trusts be registered like limited companies?
“Accounts for all limited companies registered in the UK, private or public, are on public record at Companies House. I can get them. So can you.”
James from Durham – not if you know how to do it they’re not and you can’t!
Clarke, that’s an interesting comment: “not if know how to do it”. Can you give me a little detail on what would be involved? Our interest is in global measures that work, so if there are clear problems in the UK we need to be asking the government here to address these also – it would be great if you could give some pointers on what the loopholes are.
It’s no great secret, Alex, so it’s not valuable commercial knowledge – use an unlimited company and ensure that it is owned such that it is not a qualifying company for the purposes of the Partnership and Unlimited Companies (Accounts) Regulations 1993.
The Company still has to prepare appropriate accounts, of course, and submit them to HMRC so there is no tax advantage. Just means your accounts are not in the public domain.
James from Durham
For the vast majority of UK private companies the accounts which do get filed don’t need to be audited, so they are worthless and could say anything. They also don’t have to state beneficial ownership and its possible to hide behind nominees. They are of no use whatsoever in achieving what Richard seeks to achieve.
Creg
And this shows how ridiculous your comments are
Look at the stats here .http://www.companieshouse.gov.uk/about/busRegArchive/statsFeb09.pdf
There are so few unlimited companies they are not even mentioned.
Last time I got the data it was les than 1,00 companies out of well ove 2 million in all
And the price is unlimited liability
This is so far removed from tax haven activity where limited liability is given with secrecy that the reality of your misrepresentations is apparent.
Richard
Rupert
You seem to ignore the fact I demand change in the UK too
I do, often
But you guys ignore that fact
Like you ignore anything that happens outside your own domains
Richard
On a pedantic point, your quote is probably correct in asserting that there are claims to be British emanating from the Channel Islands.
However such claims are, at best, meaningless, and probably wrong.
The word ‘British’ has so many meanings as to be meaningless.
It is true that when I look in my passport I find I am British. However in my previous passport I had the option of calling myself something other than British.
It’s a nonsense. ‘British’ is just a pigeon hole to put us in.
In reality we are a possession of the English crown. The Act of Union may have united the English crown with others, but it does not change our status.