Jersey’s made its excuses. Now it needs to provide answers to questions about what has been happening at Lloyds in the island. I suggest those questions are:
1) Why did Lloyds create the Hong Kong payment structure for a Jersey based fund described in the recent Panorama programme?
2) If Lloyds did create it to, as suggested by the salesman who was filmed, get round the European Union Savings Tax Directive why did it do that?
3) What is the purpose of the European Union Savings Tax Directive if not to stop tax evasion — which is what the EU says its purpose is?
4) If a structure is designed to help customers avoid the requirements of the European Union Savings Tax Directive isn’t it entirely foreseeable as a consequence that some might use that opportunity to evade their obligation to pay tax?
5) If Lloyds did create this structure at some obvious expense why shouldn’t it ask its salespeople to promote its availability, and the attractions of using it? Was the salesman therefore an exception — or was he just doing his job?
6) If the salesman was just doing his job isn’t this evidence of systemic abuse?
7) Could a payment structure of the sort described in the programme be set up by a relatively junior employee?
8_) If a junior employee could not set up this structure who could?
9) Will the JFSC review look at the authorisation of this structure? If not, why not?
10) Is it a requirement under Jersey’s anti-money laundering regulations to report suspected tax evasion wherever and whenever it arises, and whether with regard to taxes due in Jersey or elsewhere?
11) If a customer seeks to avoid application of the European Union Savings Tax Directive isn’t it at least plausible to assume one reason for doing so might be that they are evading tax?
12) If it is plausible that a customer refusing to exchange information with their domestic tax authority under the European Union Savings Tax Directive might be tax evading shouldn’t an anti-money laundering suspicious transaction report be submitted in each and every such case?
13) If a bank promotes a scheme that makes it easier to evade tax should it be reported as facilitating a money laundering transaction?
Those in Guernsey also have questions to answer:
14) Why would Northern Rock only operate a bank account for a shell corporation and not for a real trading entity?
15) Is it ethical to point out to someone asking if he might tax evade the availability of shell corporations for this purpose?
Many from Jersey and Guernsey like to comment on this site.
Now answer these questions — all of them.
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sorry for a naive question, but why can’t a person go directly to a hong-kong bank and open a saving account there?
Have you ever looked at a map?
Some people don’t want to go that far
but i guess you can open a hongkong account through a representative of hsbc in the uk?
Here is the Channel Islands’ official reply to these questions:
We’re independent, so f*ck u and the horse you rode in on 😎
They probably handle that from their Jersey office.
As requested:
1) I have no way of actually knowing. Ask the bank. But I assume it was to avoid clients having to avoid suffering tax withheld at source. However, see 12 below.
2) I have no way of actually knowing. Ask the bank. But ditto.
3) Yes its general purpose is to stop tax evasion. In the case of Jersey its purpose is to collect withholding tax under an arrangement which the EU itself expressly agreed so that Jersey (and some other jurisdictions) could withhold tax on interest and hand it over, without disclosing information. The EU also expressly stated that the Directive only applied to accounts held by individuals, and the EU accepts that it does not currently apply to accounts held by companies, trusts and foundations, hence a revised and extended version will soon be introduced.
4) Yes, it is possible.
5) I have no way of knowing. Ask the bank.
6) I have no way of knowing whether or he was just doing his job. I don’t know what he was told his job responsibilities actually were. If indeed he was told that it was his job to advise customers to use the Hong Kong route AND not to report it to his home tax authorities, then that would potentially indicate systemic abuse by Lloyds Bank.
7) No.
8) It would surely require senior local and/or group management input.
9) I have no way of knowing. Ask the JFSC. However, I think it should look at it.
10)Yes.
11)Yes.
12)In the vast majority of such cases, yes, but not in 100% of cases. I have cases where my clients have tax withheld but then I report the interest income when submitting the client’s tax return and offset the tax withheld against the client’s overall tax liability. The client finds this administratively simpler and there is no tax evasion and I know 100% that I do not need to file an STR for such a client. I know other practitioners who have a small number of similar clients who are dealt with in exactly the same away, but it wouldn’t be the norm. All of my other clients agreed to fully exchange information and my firm files all of their tax returns so we know that their tax affairs are totally compliant.
13) Yes, if tax is actually being evaded, but see 12 above.
14) I have no way of knowing. Ask the bank. I don’t understand the bank’s rationale if that is indeed what it is alleged to have said. It seems illogical.
15) No.
Rupert
You have had the courage to reply. Thank you.
I comment below. Candidly, although you duck some issues we seem to agree.
The action of Lloyds and Northern Rock looks indefensible. Detailed notes follow:
You say:
1) I have no way of actually knowing. Ask the bank. But I assume it was to avoid clients having to avoid suffering tax withheld at source. However, see 12 below.
This is disingenuous: the only reason to avoid the withholding is to evade the tax. After all, the withholding can be totally avoided by exchanging information. So there is no reason for this to assist compliance. It can only assist evasion.
2) Noted
3) Yes its general purpose is to stop tax evasion. In the case of Jersey its purpose is to collect withholding tax under an arrangement which the EU itself expressly agreed so that Jersey (and some other jurisdictions) could withhold tax on interest and hand it over, without disclosing information. The EU also expressly stated that the Directive only applied to accounts held by individuals, and the EU accepts that it does not currently apply to accounts held by companies, trusts and foundations, hence a revised and extended version will soon be introduced.
Just stick to your first sentence Rupert — that says it all.
4) Yes, it is possible.
Quite, in which case an STR would follow unless alternative evidence was held. The Bank made clear they did not ask about tax. So an STR had to follow.
6) I have no way of knowing whether or he was just doing his job. I don’t know what he was told his job responsibilities actually were. If indeed he was told that it was his job to advise customers to use the Hong Kong route AND not to report it to his home tax authorities, then that would potentially indicate systemic abuse by Lloyds Bank.
Thank you. We agree.
7) No.
We agree. He was not an individual acting alone.
8) It would surely require senior local and/or group management input.
It has to be Group — this is a Group arrangement.
9) I have no way of knowing. Ask the JFSC. However, I think it should look at it.
We agree.
10)Yes.
I thought I was right — therefore an STR is needed in every case where EUSTD non disclosure takes place unless steps to prove tax is paid are taken.
11)Yes.
We agree.
12)In the vast majority of such cases, yes, but not in 100% of cases. I have cases where my clients have tax withheld but then I report the interest income when submitting the client’s tax return and offset the tax withheld against the client’s overall tax liability. The client finds this administratively simpler and there is no tax evasion and I know 100% that I do not need to file an STR for such a client. I know other practitioners who have a small number of similar clients who are dealt with in exactly the same away, but it wouldn’t be the norm. All of my other clients agreed to fully exchange information and my firm files all of their tax returns so we know that their tax affairs are totally compliant.
As an accountant you can know that. Unless the bank asks it cannot know. So your situation is different. Your argument does not alter my case. If anything it reinforces it. I accept in your case the STR would not give rise to discovery of abuse.
13) Yes, if tax is actually being evaded, but see 12 above.
It is impossible to believe tax is not being evaded. The answer is, therefore, yes.
14) I have no way of knowing. Ask the bank. I don’t understand the bank’s rationale if that is indeed what it is alleged to have said. It seems illogical.
That is what the bank said.
15) No.
We agree again.
Richard
Richard
I always worry whenever we broadly agree on things ! We aren’t entirely on the same wavelength re a couple of the more technical points, on which you have out your own slant, but so be it. Generally, we’re never going to be poles apart re. tax evasion, only re. the acceptability of tax avoidance upon which I suspect we will never agree. But regarding tax evasion its impossible to defend the indefensible and the Channel Islands have no need whatsoever to be involved with it. It does not do the islands any favours and there is more than enough legitimate business to go round that the islands just don’t need to get involved with tax evasion. If some organisations can’t survive without tax evasion money, then its in every islander’s interests to drive out such businesses. Its always been the fear that certain retail banks would be the culprits if any systemic tax evasion is still being facilitated, and its only right that they are held fully accountable if guilty of it.
Hello Rupert
First off, let me apologise if you felt any of my ramblings back on home turf were personal. I really can’t pin any of my accusations against the general malaise on your text-based personality-extension, seeing as you’ve engaged with my over-egging for bloomin years, all duly noted. As seen above, the drive for more just practices is a function of basic decency – and it goes across the board, from ‘Benefit Cheat’ to Secretive Trillionaire.
The problem I have is the lack of passion shown to the public by the politicians (in Guernsey) that the issues raised by the types of investigations Richard Murphy has dedicated himself to are not somehow relevant to them.
The whole set up denies the right to criticise.
The majority response from the Sector about that Panorama tickle was that the BBC is biased. They rubbished the editing, the fripperies, the research, the very notion- but offered nothing except an adherence to obvious anti criminal reporting and an exchange of worthless agreements with a tiny minority of countries. I mean, do you believe it was all made up by a left wing conspiracy?
The drive for PR can only mean one thing. Why are utterly logical concepts like auto-exchange and country by country reporting so vehemently denied any debate? There can be no use of ‘technical difficulties’ for an industry that can dream up what it does. As for the business reason for transparency, isn’t it obvious?
A global industry using national legislative and constitutional discrepancies to concentrate the capital away from the real economy is ultimately self defeating. The evidence is observable. Transparency, as there is in most retail, enables progressive investment.
I see nothing long term in the nature of this ideology’s corporate vision. Human life is not measured in bubbles. To make real wealth, real growth and real hope for those that are less privileged we need full discourse alongside competition. An understanding that personal status is not augmented by hiding one’s presence in the global community. If you have wealth, then you command power. Would you not agree that the use of a power that affects those that cannot see behind closed doors is sinister if not widely dessimenated and understood as beneficial to the common good?
So how come it is justified that a few thousand decision makers can wreak havoc on the lives of billions?
That is what the system that enriches Guernsey is reliant on. It is the only conclusion I can make from the complete lack of care.
It’s bad PR.
Richard the more you attack Jersey, the more it appears that you envy its’ success. You are like our controversial, (yet not as stupid as), Senator Syvret, factually inaccurate repetitively so people now brush your views aside every time and end up laughing at what you have to say.
Surely you must feel this now?
John Christensen is the same, hates Jersey, hates its finance industry and simply because it has done so well.
Matt
I am absolutely sure that amongst those with whom you mix this is true. I can live with that. I really don’t mind about it either!
I also however noted the considerable support Panorama get in comments on the JEP site.
Now, why was that if John and I are wrong?
Richard
I just cannot understand this “jealousy” argument.
It is surreal.
It is repeated so often, and with such conviction, that it has become a prayer. It is a faith.
Of course we’re all susceptible to it, but the wisdom lies in understanding where the assertion may not quite be as it really is, and being able to admit it.
There would be more value to the defence if certain aspects were acknowledged. It would provide a better foundation for those that are accused of “jealousy” to engage with the wider aspects of the business.
I’m fairly sire I’ve read on this blog that Richard Murphy is not trashing the whole caboodle.
The need for transparency and accountability is paramount in order to achieve maximum efficiency in the markets and in the process of Government. There is no good argument to the contrary.
Arnald
The ‘jealousy’ thing says more about the teller then anything else – that they only function on money
It is beyond their comprehension that I might do something on the basis of principle, conviction or faith
They are bereft of such essential qualities
All they have left is jealousy and hate
Sad really
Richard