As some will know, Colin Powell, the man many think behind all power in jersey, one time head of its civil service, then head of the Jersey Financial Services Commission and now an adviser to its chief minister, and I have been in correspondence about my ‘Plan B for Jersey’. Previous instalments are here, here and here.

Colin explained to me in mid August he would not be able to reply for a while, but now has, as follows. I’ll be replying, probably next week. I have edited out one comment by Colin merely to protect sources of mine who I do not think should be referred to on this blog.

Dear Richard

I hope you are well.

I have now had more time to address your e-mail of the 15 August.  Apologies for the delay in responding but you know the reasons for this from my e-mail of the 20 August.

Taking your points in turn —

1.      Why our TIEA partners do not wish us to publicise the number of requests we receive from them under the TIEA is a question only they can answer.  For our part we have no objections to making the number of requests public if our TIEA partners are happy that we should do so.  The assessors of jurisdictions under the Global Forum Peer Review Programme however will know the number of requests, and how many of the requests have been responded to and how quickly, and so will be able to take this information fully into account when undertaking their review.

2.      You state that “massive information hurdles” have obstructed the process of using Tax Information Exchange Agreements, and you say this is also the view held by tax officials with whom you have spoken.   I have raised this matter with some of our TIEA partners, and also with the Global Forum Secretariat, and I can find no support for your statement.  Indeed, the strength of the commitment to the TIEA programme, which includes a proposal for a multilateral approach, among the members of the Global Forum generally also would indicate that your views on TIEAs are not shared.  The fact that we are receiving a steady stream of requests also suggests that the “obstructions” are not seen by those jurisdictions concerned as being as great as you suggest.  There is one good reason why the number of requests is picking up steadily from a slow start.  Most of the TIEAs have come into force in the past year or two.  These TIEAs provide that for civil tax matters, for which the majority of requests are being made, a request can only be made in respect of cases arising subsequent to the date of entry into force.  As a tax year will need to have elapsed before a failure to make a tax return is identified, or for evidence to be forthcoming of an incorrect tax return, there is an inevitable lag in the making of requests.

3.      Contrary to your e-mail, determining the ownership and control of companies has not been difficult where this has been part of the request received — and a number of the requests received have sought this information.  Having trust and company service providers (TCSPs) that are well regulated, and with requirements placed on them regarding KYC/CDD that are based on international standards, Jersey is in a much better position than most if not all other jurisdictions in providing information for companies and trusts when this is requested.  In my view you are therefore incorrect when you say that “the chance of linking assets, such as the bank account, owned by a company which is in turn controlled by a trust to which a person, under investigation in a state with a TIEA with Jersey, may or not be a settlor and/beneficiary is remote in the extreme“.

4.      Taking up another of your points, when a request is received from a TIEA partner in respect of a company incorporated in Jersey (for which information is available from the Company Registry) or a company not incorporated in Jersey that is being administered in Jersey (for which information is available from the administrators) the information required can be (and has been) provided to the requesting authority.  You refer to “tax residence”.  This is not a condition to be met for a request through a TIEA.  Any foreseeably relevant information that is in Jersey, or is obtainable, can be requested through a TIEA even if the company or trust is not subject to Jersey tax.  There is therefore no insurmountable obstacle facing a TIEA partner in obtaining information about a company whether incorporated or administered in Jersey.

In common with other jurisdictions that  have a Trust Law, Jersey may not know where every trust based on that law is being formed.  They can be formed anywhere in the world.  However, if any trust is being administered by a Jersey TCSP there will have to be information available, because of the regulation of TCSPs, and more information than would be the case where trusts are being administered without that regulatory oversight.

5.      For companies, the rule being advanced internationally is that information on a company should be available from the country of incorporation and that it is the responsibility of the country of incorporation to oblige the company to keep reliable records.  In this respect Jersey is again in a strong position by comparison with other jurisdictions because of the requirement that a company being formed in Jersey must give to the Company Registry information on who is the ultimate beneficial owner, and there is also  a requirement that any subsequent change of beneficial ownership should be notified to the Registry or recorded by a Jersey TCSP.  However, in discussions with the FATF on the subject of disclosure in respect of Recommendation 33, and with the Global Forum on Tax Transparency and Information Exchange for Tax Purposes, we have stressed that beneficial ownership information should be able to be obtained not only from the country of incorporation but also from the jurisdiction where a company is being administered.  Again as noted above, because of the regulation of TCSPs, Jersey is in a stronger position than most if not all other countries in providing information to a requesting jurisdiction, and that has been recognised internationally.

5.      You raise the question of information on the public record.  We can and do assist jurisdictions who make a request for information under the cover of a TIEA or mutual legal assistance treaty.  However, in common with other jurisdictions including G 20 members, the information requested  in respect of bank accounts, beneficiaries of a trust, and ultimate beneficial owners of a private company will not be found on a public record.  When greater public disclosure  becomes an international standard, and a requirement that is generally applied, then Jersey can be expected to adopt that standard in the same way that it has adopted related international standards to-date.

6.      On the subject of the EUSTD, the requirements that we meet are those set by the EU.  We are assisting them in collecting tax, or in providing information on interest payments where individuals opt for the voluntary disclosure option.  Knowing the number of accounts liable to withholding tax has not been required, and therefore it has not been necessary for us to collect it in order to meet our obligation to EU Member States.  If the Member States were to request it I am sure we could and would obtain it.  However, this may be considered somewhat of an academic issue as with the prospect of the ending of the transitional period in the not too distant future there will then only be the exchange of information.

Kind regards

Colin