Hansard reported the following exchange in the Commons yesterday:
Fiona O'Donnell (East Lothian) (Lab): All 10 tax havens among the UK's overseas territories and Crown dependencies committed at the G8 to sign the multilateral convention on mutual and administrative assistance in tax matters. Will the Prime Minister tell the House whether the timetable is in place yet and, if so, how many have signed?
The Prime Minister: They all agreed to take the necessary action on tax exchange with the UK, international tax co-operation and beneficial ownership, all of which was set out at the meeting I had with them. I cannot recall the exact timetable off the top of my head, but I will make this point: I do not think it is fair any longer to refer to any of the overseas territories or Crown dependencies as tax havens. They have taken action to make sure that they have fair and open tax systems. It is very important that our focus should now shift to those territories and countries that really are tax havens. The Crown dependencies and overseas territories, which matter so much–quite rightly–to the British people and Members have taken the necessary action and should get the backing for it.
This is absolutely absurd. What Cameron is saying is that the very places his G8 summit was supposedly meant to tackle - Cayman, Jersey, Guernsey, the Isle of Man, Bermuda, Gibraltar, the British Virgin Islands and others - are no longer tax havens because he had a one morning meeting with them in June at which (under duress and without any intention of complying on their part) they made a vague commitment to take unspecified actions at an unspecified time in the future.
In the last week France has listed Bermuda, the British Virgin Islands and Jersey as non-cooperative tax havens, and all with good reason.
The White House and the Nordic states issued a press release on 4 September highlighting that the:
The misuse of shell companies can be a severe impediment to sustainable economic growth and sound governance. We will make a concerted and collective effort to tackle this issue and improve the transparency of companies and legal arrangements.
The supply of such entities is the stock in trade of all of these places. Several of them are failing the Rather rudimentary OECD tests on basic compliance with international standards, their systems are so bad.
But Cameron says none of them are tax havens.
I beg to differ: they all are, and all have to not just say they'll take action, but deliver on it before anyone could think otherwise. That means at a minimum:
- Full automatic information exchange
- All accounts on public record
- All beneficial ownership recorded on public director
- An end to nominee arrangements
- Full cooperation with the EU on the savings tax directive
- Actually supplying data under tax information exchange agreements
None meet this standard.
They're tax havens all right. And will be for a long time to come.
But at least we know where David Cameron stands now. As the Observer noted on Sunday, his hypocrisy on the UK tax system is straining the patience of many. His hypocrisy on tax havens clearly knows no limits. But then that's not surprising. It was Cameron's father's tax haven activities that are repotted to have paid for his Eton education. Was it ever realistic to think he'd change his spots?
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Dave probably needs another holiday.
1. What they showed the PM was the current legislation and evidence showing the facts about estimated tax avoidance and evasion, and they explained in better detail the benefits each territory brings (both financially and economically) to the mainland UK and various other jurisdictions worldwide (such as the vital role in facilitating foreign investment)…. Simples….
2. Jersey doesn’t allow shell companies anymore and hasn’t for quite some time. The Registrar of Companies requires full disclosure of all beneficial ownership (full disclosure) and the companies must have a purpose. This includes the beneficiaries of trusts, all types of trusts including discretionary trusts.
I have 15 years experience in finance and this has been the way for at least 10 of those years. I have drafted and overseen the implementation of large compliance programs in Jersey over the last decade. There will always be a few bad apples, they exist in every jurisdiction. But the current industry has pushed out the majority of the old anti-compliance’ boys….
Which is why France does not believe you – based on experience
No one is denying the way it used to be, but France is behaving rather childish on this occasion. As I understand it, France has some outstanding requests with the Jersey tax authorities. This is down to due process. France has requested information on its own citizens who are either domiciled, resident and/or have assets in Jersey. Upon being notified of the requests, the persons concerned began legal action to prevent the release of said information to the French. The case is expected to be heard in the Royal Court. Jersey law permits individuals to challenge these requests for information through the Courts if they are of the opinion that they are unreasonable. This is their legal right.
So the Jersey tax authorities are prevented by Jersey law from acquiescing to the requests as the legal validity of such requests is now to be decided by the Royal Court. It’s quite simple really. If the requests are reasonable, the Court will side with the French and the information will be forwarded. The law is the law and the tax man is not permitted to break it just because France is pissed off it has to wait.
The UK and some others will lean on France and we’ll be off that list in a matter of weeks. Politics at play here, nothing more.
You offer the jersey excuse for the French actin
It is much more complex than that
But live within your own little bubble of myth if you wish