Tax News has reported that the Guernsey and Jersey governments have jointly stated:
“As communicated last week, officials from Guernsey, Jersey and the Isle of Man continue to engage with US officials, aimed at concluding Intergovernmental Agreements under the US FATCA regulations.”
“We also share a common commitment with the UK to combat tax evasion and to participate in international efforts to combat financial and fiscal crime. We have long made it clear that neither Island has any wish to accommodate those engaged in tax evasion.”
“The UK government is seeking to promote more widely as a new international standard the principles of the US Foreign Account Tax Compliance Act. Jersey considers that it is important that in doing so the UK government mirrors the approach of the US FATCA in being global in its application, ensuring a non-discriminatory approach for all jurisdictions.”
“In our ongoing discussions with the UK government we will be pressing them to make clear the steps they are taking to promote the adoption of automatic exchange of information worldwide to ensure that a level playing field is achieved for all finance centres competing in the global market place.”
The net result of this is simple: Jersey, with Guernsey, as ever, trailing in its wake, is refusing to supply to the UK that information to tackle tax evasion that it is willing to supply to the USA.
The argument that a global level playing field is required before it can agree is absurd. The agreement with the USA is not global: it is a series of bilateral agreements. So too is that with the UK a bilateral agreement. The two are therefore, as far as Jersey is concerned, identical unless that is (and it’s a big unless) Jersey insists that a level playing field has to be defined in terms that mean that equal opportunities have to be supplied to tax evaders. If that is what it means then it does, of course, reveal in its statement exactly where its true sentiments are on this issue.
But the matter is more serious than a simple refusal by Jersey and Guernsey. First of all, as I have already noted, Jersey might think it can hold the UK to ransom on this issue, but my sources suggest to me that the UK is not minded to take no for an answer, and is willing to refuse Jersey its FATCA legislation if need be. That means its relationship with the USA could fail. Second, and perhaps as importantly, Jersey is forgetting that the UK can legislate on this issue if it wishes, and there is nothing Jersey can do about it in that case. To be precise, the latest, very carefully worded, form of this opinion comes from a 2010 report issued by House of Commons Justice Committee that says:
The UK Government is responsible for ensuring the good government of the Crown Dependencies. Some witnesses to this inquiry indicated a desire for the Ministry of Justice to step in to address certain grievances they have in relation to the governance of the Islands. However, we consider that the Crown Dependencies are democratic, self governing communities with free media and open debate. The independence and powers of self-determination of the Crown Dependencies are, in the view of both the UK Government and the Island authorities, only to be set aside in the most serious circumstances, such as a fundamental breakdown in public order or of the rule of law, endemic corruption in the government or the judiciary or other extreme circumstance.
However, we note that, in very small jurisdictions, it is possible for the existence of very significant economic, legal or political power to skew the operation of democratic government and this is a possibility in respect of which the Ministry of Justice should remain vigilant.
I think the first sentence is critical. And I happen to think that when the UK sees a refusal by these places to assist it in upholding the rule of law in the UK – which is exactly what is happening – then the retort to this missive from Jersey (which is no doubt driving this process) will be short and blunt. That will be because, I think, the message will be that they think there is endemic corruption in the Jersey government because it will be seeking to assist tax evaders. And that would be true.
To put it another way, this one is going to run and I think it may also escalate because right now the UK cannot afford to have two little islands for which it is responsible and for which it can legislate saying they will proactively seek to undermine UK law by helping tax evaders- which is what they are saying right now.
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Here here Richard, spot on.
I live in Jersey and once again I feel ashamed of the line that is being taken here.
The exploitation of LVCR and the insane court action Jersey took and of course lost, cost us dearly. Never mind the monetary cost, the stupidity of this pimple taking legal action against the UK on such a matter has no doubt raised the ire in the UK.
A few years ago I was involved in a situation with a situation where Jersey was saying “no” to the UK when the UK had an obligation to ensure its islands toed the line.
A few heavies from the UK arrived and explained to Jersey in one syllable words what the consequences would be and lo and behold we toed the line.
That Jersey can say “only if all others sign” whilst at the same time wishing to sign with the USA is two-faced.
So Richard maybe you are wrong, it won’t run and run, Jersey will be put in its place and fall in-line.
Richard
I predict with confidence that Guernsey will sign. I have far less confidence that Jersey will do so. Its for the same reason why Jersey has not signed up foe automatic exchange under the EUSD.
What they want though is a level playing field with Cayman,Bermuda and BVI, otherwise all business will migrate there. But the deal between the UK and the Swiss is the real issue. Under that deal the Swiss negotiated a carveout for nondoms. It surely would be better for nondoms to to be looked after in the CI, with automatic exchange,than in Switzerland, without it.
Your view on the constitution is flawed. It is not the duty of the islands to put the interests of the UK ahead of their own. There is no breakdown of law within the islands. Guernsey is already automatically exchanging information. That argument against Guernsey simply doesn’t stack up.
The argument against Jersey stacks
Guernsey has to break ranks
I agree.
But do you agree that it is better for the UK that, on the assumption that the islands do sign up, it is better for nondom structures to be administered in the islands than in Switzerland? At least the UK could then get to the information if it needed to.
Lets face it, the nondom regime is going to remain. Nondoms will be permitted and even encouraged to continue using it by the UK.
I believe that Guernsey and the Isle of Man can manage perfectly well without looking after UK resdoms. Jersey on the other hand clearly doesn’t think that it can. I suspect Guernsey can equally manage without any other EU money at all, as there is hardly any of it there.
The extra UK tax take out of Guernsey and the Isle of Man will be negligible. But those two islands can easily keep the UK and EU happy.
I really do fear for Jersey. Guernsey gets automatically tarred with the same brush and definitely needs to break rank.
Richard,
Your either being deliberately misleading or you don’t really know what FATCA is all about. It is distinctly different to what the UK is after.
1) The crown dependencies don’t actually need an IGA for their resident companies to be compliant with FATCA as each institution can individually become qualifying FFIs reporting directly to the IRS.
2) The IGA that is being sought with the US alleviates and simplifies the additional workload that each institution would need to undertake, allowing the reporting to go through their local tax authority (similar to current EUSD reporting).
3) Failure to comply will result in a withholding tax being applied to US Dollar payments of the FFI.
4) Failure by the CDs to sign upto FATCA (either by UK blocking or other reasons), does not mean that the institutions in those islands will not be complying with FATCA (it will just be more onerous to do so).
5) Most institutions within the crown dependencies already have relationships with the US IRS as they are generally QI compliant … FATCA goes further.
The above is applicable to all countries in the world if they want to use the US Dollar, it does not single out any single country or Island for special treatment. It is fair and applied to everyone that wants to use the US currency. What the UK is trying to achieve is very wide of the mark, they have singled out specific jurisdictions and are using blackmail tactics to illicit something similar to FATCA but only from those jurisdictions. Why doesn’t the UK go the whole hog with a sterling based version of FATCA rather than being discriminatory against certain jurisdictions?
The reality is that without legislation banking will be a nightmare in these places
I talk realities
You are talking misinformation
And the UK demand is the same as the US demand except f corse the US demand means the systems will already be in place so it is not onerous
Your claims are disingenuous, to be polite
No doubt the UK can legislate for the Channel Islands if it has to but what about the Overseas territories like Cayman and BVI? If automatic exchange simply drives the dodgy money to the Carribbean it could be a pyrrhic victory. This needs to be applied to the whole British network or it’s discriminatory
We can take over the BOTs whenever w like – as we have in Turks & Caicos
Richard
Not true. The UK can only intervene in the event of breakdown of law in the country, which is indeed the case in TCI, but is not the case elsewhere although Cayman is heading on that direction.
Why isn’t the UK simply asking Bermuda, BVI, Cayman and TCI to sign a similar agreement to the one that they want the Crown Dependencies to sign? The UK agreement with the Swiss is going to cause the UK a problem as its going to be applied as a reasonable benchmark.
Jamie is quite right that the CDs can comply with FATCA without signing an IGA.
Oh dear – you guys whistle in the wind
Refusing to cooperate to prevent tax evasion – isn’t that a sure sign of endemic corruption?
Richard
“Refusing to co-operate to prevent [ALLEGED] tax evasion”. On what basis can that allegation be possibly made against those of the jurisdictions who have already signed up to automatic exchange of information, such as Guernsey and the Isle of Man, and who have therefore addressed the very issue?
There is no case to answer re Guernsey and the Isle of Man. Its a more debatable point re the other BOTs and CDs.
You have not signed up to AIE
As you well know
You do a tiny amount of AIE on interest paid to individuals, that’s all
That ignores all complex arrangements
Politely, stop lying about what you have done. Deliberate misrepresentation is a lie – and there is no way you can claim you have AIE
Richard
Guernsey and the Isle of Man have signed up to and comply with the provisions of the automatic exchange of information provisions under the European Union Savings Directive, and do everything required of them under the provisions of that Directive. Nothing more, nothing less.
That is a fact and for you to try to claim otherwise is both wrong and malicious.
As you well know, the EUSD does not currently cover complex arrangements. If and when it does, then of course Guernsey and the Isle of Man will comply fully with that.
If the islands’ financial services institutions were to provide any more information than is required under that law, then each and every one of them would be in breach of their general obligations to their clients in terms of confidentiality, opening them up to civil actions and resulting damages.
The EUSD provisions are what they are, not what you personally would like them to be. Yes, changes are proposed. Yes, they will probably come in. If so, then that’s absolutely fine. There are processes for doing that and as far as I can see, those processes are being followed by those driving the extension of the EUSD. But they do not exist yet, and that applies as equally to Germany, France and the UK etc as it does to Guernsey, the Isle of Man and Jersey.
What you want may well come. But it does NOT yet exist and is ridiculous for you to make statements like that based the law as it currently stands.
You claimed you do AIE
You don’t
To claim you do was wrong – and you admit it in your statement. AIE would cover all arrangements. You don’t do that
Fact
And there is no indication you will dully comply with a new EUSD – can you show the evidence for that claim?
Patrick’s comments indeed seem very contradictory and demonstrate a singular lack of logic.
He says on the one hand that Guernsey (and the Isle of Man) “do everything required of them under the provisions of [the EUSD]. Nothing more, nothing less.” Which I believe is true.
But the point of course is that the proposed FATCA-like deal is asking for MORE, as Richard explains and Patrick apparently accepts: “the EUSD does not currently cover complex arrangements.” The proposed new agreement would.
So how can it be that, in signing up to the (very restricted) EUSD, Guernsey has “therefore addressed the very issue” ie the issue that the proposed new agreement seeks to address relating to complex arrangements? And thus that “There is no case to answer re Guernsey and the Isle of Man.” ?
Seriously Patrick, how many serious tax criminals anywhere would be stupid enough to put their ill-gotten gains in an ordinary bank account of the sort covered by the current EUSD?
Anrigaut
We are speaking at crossed purposes.
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Richard
You are beyond belief. I cannot believe that you will not allow publication of my FACTUAL responses.
Not to worry. I have a copy of them. I will re-publish them elsewhere and publicise how ridiculous and childish you have become.
If somebody counters your incorrect comments with facts, you just cannot handle it.
Your choice, but don’t think you’ve heard the end of this. It will come back and bite you.
Oh dear: do you honestly think that I am bound to publish your misinformation?
Or your claims that someone is agreeing with you when they are clearly not doing so?
And do you really think that I have no editorial freedom?
Or that your threats worry me? Remember, opinion of me in the Crown Dependencies could not be lower.
If you wanted to engage in honest debate you could, and people do who do not agree with me
But I will not tolerate abuse form one commentator of another (including twisting their words) and nor continued unfounded claims
Now go and bite me elsewhere if that is your wish – but I assure you – people already know I dent this site. You won’t be saying anything new
Just for the avoidance of any doubt and in case others felt I was unclear, Richard is perfectly correct in saying that I was not agreeing with Patrick, beyond the indisputable fact that Guernsey is indeed signed up to the current EUSD, with which I can only assume they comply fully. If Patrick claimed that I was, then he is mistaken. I fully accept however that our “purposes” may well be “crossed”
[...] Isle of Man has now agreed to implement a FATCA style agreement with the UK. Jersey and Guernsey have not. What might explain the difference in [...]
I think Richard, the UK should start looking at their own back yard, ie: the city of london square mile,I believe is the biggest mover of assests in the world.
Also I know you have a plan “B” for Jersey, but hey, Jersey has a plan “C”. The boy bailache has the answer,”go independant” !!
For heaven’s sake – don’t you notice we criticise the City, often?
What’s your persecution complex for?