Tax Research UK

Rumour reaches me the Foot Report will be out tomorrow.

It’s interesting to speculate on what this report can now add to the issues the Crown Dependencies and British Overseas Territories now face. Since it was announced almost a year ago the Turks & Caicos Islands have passed into British control, Cayman has seen its economic wings clipped and has been ordered to tax, all three Crown Dependencies have been told their system of corporate taxation is unacceptable and must be reformed and the Isle of Man has had £140 million of its VAT subsidy withdrawn leaving it in economic turmoil – but definitely delivering a clear message to those in the place who responded rather aggressively to Alastair Darling’s comment that it was a tax haven.

And yet, there is much still to be done. Regulation in these places has a long, long way to go. They remain secrecy jurisdictions - places that intentionally create regulation for the primary benefit and use of those not resident in their geographical domain that is designed to undermine the legislation or regulation of another jurisdiction. They do in addition create a deliberate, legally backed veil of secrecy that ensures that those from outside the jurisdiction making use of its regulation cannot be identified to be doing so. If they are to be sustainable that needs to be tackled.

For details of what needs to change read the individual jurisdiction reports here.

Let’s hope Foot does something to shine light into these very dark places, because that’s very necessary.

Richard Murphy Cayman, Guernsey, Isle of Man, Jersey

Guernsey Finance :: Guernsey will not need a ‘bail out’ from the UK taxpayer.

Thought this quite amusing

Maybe the moral is ‘never say never’

Because I think the assumptions inherent in this look decidedly dodgy now

Richard Murphy Guernsey

The FT has reported this morning that:

Britain’s crown dependencies have been plunged into uncertainty after the government signalled, in a dramatic sign of the intensifying pressure on tax havens, that their corporate tax regimes were unacceptable to the European Union.

The news is set to force Jersey, Guernsey and the Isle of Man to overhaul their tax regimes, possibly requiring them to introduce corporation tax. In a further setback for the Isle of Man’s finances, it was told that the “common purse” agreement under which it shares value added tax with Britain was under review.

The crown dependencies use the “zero-10” corporate tax regime, which means many businesses pay no corporation tax. Although these systems were recently introduced to address EU concerns about their previous tax regimes, some European member states view them as predatory.

As far as I can tell the report is accurate with regard to the Isle of Man’s Common Purse Agreement: the UK has served notice that the absurd subsidy to the Isle of Man, which has a higher GDP per head than the UK, and about which I have written so often, must be at least partially withdrawn.

The report about the zero ten tax regimes of Jersey, Guernsey and maybe the Isle of Man is less accurate. I cannot see how the EU can object to a zero per cent tax rate: indeed there is, as far as I can see no room to do so in the EU Code. These was in the OECD’s 1998 attack on tax havens – which has now been consigned to history – but that and the Code are quite different things.

The reality is that in 2003 the Crown Dependencies did get an agreement from the EU that they could offer 0% taxes – at least in principle – and they could at the same time charge 10% tax on resident financial institutions. So long as these represented a minority of tax payers and were subject to clearly defined criteria this was agreed, in principle by the EU as I understand it at the time. I think this is beyond dispute. Hence ‘zero ten’ was born – and it has been claimed – I stress wrongly - with EU approval.

The trouble was that subsequent to receiving agreement the arrangements proposed by all three of the Crown Dependencies did, in varying ways, seek to move the ‘ring fence’ to which the EU objected from within what was perceived to be in the business tax code into the personal tax code of these islands.

This needs explanation. The EU Code – which attacked abusive tax regimes in a great many EU countries, and has subsequently been applied to the tax regimes of accession states, and which was therefore not targeted at tax havens per se, said that an arrangement was harmful if it was apparent that it provided a benefit on an unequal basis. So, in the case of the Crown Dependencies it was considered abusive that non-resident companies not be subject to tax and yet companies registered under identical law be liable to tax at 20% (at the time) if owned by local resident people.

The Crown Dependencies deemed it essential to their future – rightly or wrongly – to have companies on offer to those wishing to avail themselves of their secrecy provisions that paid no tax at all – an arrangement that has, of course, facilitated considerable tax abuse, whether it be evasion or avoidance. As a result they said that, taking the lead from the Isle of Man, who announced their policy in (if I recall correctly) 2000, henceforth they would not charge any tax on corporate profits recorded in the island – bar financial services companies, as noted above.

It is this policy the EU approved in 2003. It was not abusive.

However, when details of the schemes were announced – after 2003 I stress, I think in every case – there was a twist – which was that whilst theoretically local companies did not pay tax, their shareholders were forced to do so. The details of the schemes have varied over time. At first the profits of the local owned companies were simply apportioned to the shareholders as is they belonged to them – and those shareholders then paid tax as if they owned that profit – even though they might have had no access to the profits in question. These arrangements were extraordinary – they required shareholders to submit company tax computations – to which they had no entitlement as part of their own tax returns and pay tax on profits they may well not have received. They abused human rights law. They also required the company to pay the tax as agent for the shareholder. The policy was very obviously abusive. It was also very obvious that the reality was that nothing had changed, at all. Local companies were still being required to pay tax – it was just being said (and even then in fashion extremely hard to justify) that although they were paying they were doing so as agent for the shareholders. It was this scheme I objected to in 2005. Even then Jersey claimed I was wrong – that the scheme had been approved by the EU. But this was wrong.

I proved that. I went to Brussels and asked the team who would determine the issue on behalf of ECOFIN - the body that has to deem whether a tax scheme is abusive, or not. They made it very clear in 2006 that:

1. No scheme was approved until it was law: Prior approvals were not given. They only ruled on laws in operation. So in their opinion zero ten had never been approved and would not be until it was in operation;

2. That the scheme of the sort noted above would not get approval – it was abusive.

Despite this Senator Walker claimed Jersey had approval –and it was to this claim that John Christensen addressed comments in 2006, which I have recently drawn attention to. What we knew was that the claims made, repeatedly, by Jersey politicians that zero ten had been approved were not true. We also knew that if we could determine this to be the case so too must they have been able to determine that.

The row had an impact – the proposed scheme was changed. Someone, somewhere obviously told the Crown Dependencies that the schemes would not be approved. Whether that was as a result of the Tax Justice Network visit to Brussels I do not know – but I do know the schemes were changed so that local shareholders were now only required to pay tax on 60% of profits, which was enforced by requiring that locally owned companies declared dividends of that amount of their profit. But powers were retained to ensure that if the companies failed to do this then it could be deemed that they had – and the company could still be required to pay the tax on behalf of the shareholders. So, some of the human rights abuses may have been removed – and companies were now allowed to retain some profit – but the ring fence that meant locally owned companies had to, in effect, pay dividends to ensure tax was paid whereas non-locally owned companies did not was retained. And since this was solely related to tax at the end of the day the abuse of the Code remained because locally owned companies were at a competitive disadvantage because of the application of deliberately constructed tax rules ensuring that this was the case – and the Code does not allow that.

This is why the Code has been violated.

Big questions remain. Did the UK mislead Jersey et al into thinking zero ten was acceptable? I genuinely don’t know, but candidly it does not matter. All the UK could do was to agree to present a scheme to the ECOFIN committee, or not. There was no way it could approve any scheme – that was the sole right of ECOFIN – so whatever the UK said there was no way any local politician could rely on that to say there had been approval under the Code. That was just not true – and the most cursory of examinations of the facts could have proven that.

And because the schemes have only been in operation now since 2009 (in the case of Jersey, slightly earlier for the IoM and Guernsey) it is only now that the ECOFIN committee can review them. I suspect that the review was planned for early next year based on past experience and advice I received a while back on the process involved. It was then they would get approval, or not as the case may be. And it was down to the UK to present the case – I stress, for the first time – for approval.

It seems the UK has decided it could not present that case, whether because it did not believe in it or because, as has been reported, others showed signs of raising material and justifiable objection. Again, it does not really matter which – either way approval, long predicted, but never secured was not going to happen.

What’s the relevance of this analysis? I suggest three things. First, ministers in all these places have long said their tax schemes had been approved. On what basis is not clear – because in each and every case that very obviously could not be true. Until ECOFIN met and considered approved and operational legislation there was no way an approval could be given – so any such claims made were, by definition, wrong. Worse than that: they were untrue, and so seriously misleading to business and local people. I said so. So did others. We were right to do so, but were repeatedly told we were wrong. That has been proven beyond doubt not to be the case now. If those who claimed the schemes were approved were right then they could and indeed should produce that evidence now, table it for all to see, and challenge the UK and EU with it and say ‘be damned – we can do this as we have our approval to do so’. But I hear not a whisper that this will happen – because I am sure no such agreement exists. In which case, by definition all those who claimed the actual proposed zero ten schemes were approved must have made incorrect statements, and candidly, they must havce known that to be true. After all – you either have an approval or you don’t. There’s really no way round that. This is why there has been no fight back from the Islands – they all know they have no basis on which to fight – which is, again, clear indication they all knew they never had a scheme approved in the first place.

Second, ministers and others in the Isle of Man have repeatedly said I have been wrong to say the IoM has been subsidised under the Common Purse Agreement. And yet, once again, when change is announced they have simply roiled over and accepted the change. Why do that if they have any valid claim to the money on any reasonable and justifiable economic logic? Their trouble is, as I have repeatedly shown, that the logic for that claim does not exist – the IoM has been subsidised and that is the beginning and end of the story.

Which brings me to my third point. The tax policy of these islands has been built on the basis of not very sophisticated tax avoidance schemes and misrepresentations of the truth to the public for the last few years. That’s no basis for the future. That future has to be built on a new basis of openness, transparency, compliance, and a willingness to cooperate which has been absent to date. Only then can these islands be integrated into the international financial community. I hope they are – but only on that basis. And this will require an enormous change of culture within the islands, their politicians, their representative organisations and a leap of faith from the rest of the world that has gown not to trust them. Is all this possible? I hope so. But time will tell.

Richard Murphy Guernsey, Isle of Man, Jersey

Race is on to replace zero-10 » News » This Is Guernsey.

Guernsey minister says 10% corporation tax across the board is likely

The tax haven is dead

Now let’s have openness and transparency as well and lay the Guernsey secrecy jurisdiction to rest at the same time

Richard Murphy Guernsey

Spot the trend:

• G20
• ‘Maundy Thursday letters’ to Crown Dependencies and British Overseas Territories
• Turks & Caicos taken over
• Cayman told to tax in return for permission to borrow
• Isle of Man told VAT subsidy to be reduced
• UK refuses to support ‘zero/ten’ regimes in the Crown Dependencies

These are not unconnected events. They show that the tax havens have always, and only, existed with tacit political support.

And it seems very likely that London has now withdrawn that support.

This is the really big news.

How big? well my blog as already (and it’s only 6.50pm) had its third biggest ever day of traffic. It’s a crude guide – but it certainly says something is up – and people are worried.

They should be. The next step is what to do about it. Some may think my offer if help is not serious – but it is. I have proven I really o understand this issue. Now it’s time to get these places out of the mess they’re in. And I’m keen to see them do that.

Richard Murphy Cayman, Guernsey, Isle of Man, Jersey

I have written extensively about the fact that the Crown Dependencies do not comply with the requirements of the EU Code of Conduct on Business Taxation. For those not familiar with my history on this issue – I was actually engaged by the States of Kersey to advise on it in 2005 – and got sacked for my efforts having caused a minor constitutional crisis along the way before being so. My report to them is available, here.

My advice was simple then: what Jersey planned did not comply. The same was true of the Isle of Man, I argued. Guernsey, maybe less so. And I have been consistently proved right for one good reason. The Code was designed to prevent the existence of tax ring fences which meant beneficial tax arrangements were offered to non-residents denied to residents.

Jersey and the Isle of Man, in particular, thought (using he abusive logic so well known to their local lawyers and accountants) that they’d just avoid this requirement by moving the location of the ring fence. Instead of offering two rates of tax on companies – zero per cent for offshore companies and 20% at the time for locally owned ones they claimed they introduced just one rate of zero per cent, for all but some banks who would (and the EU agreed this was acceptable) pay 10%.

That may have been acceptable to Europe bar one small point: as both governments realised this would mean that everyone ion the islands would incorporate and payment of tax would become entirely voluntary. And, like all governments, the administrations in the Crown Dependencies really don’t like their own taxes being avoided. So they introduced a new scheme whereby locally owned companies have to either distribute at lest 60% of their income as dividends, forcing local owners to then pay tax on the dividend – or if they refuse to do so then they are deemed to have done so and the company must pay the tax due by the local owner whether they like it or not.

To anyone but a tax abusing lawyer it is abundantly clear that this is a tax on the profits of locally owned companies which does not apply to those companies owned by people elsewhere – and is therefore a ring fence of exactly the same type as that which the EU Code sought to abolish. I told them so, loud and clear. i told the Isle of Man that as well, loud and clear. But Jersey didn’t like what I said so they recruited a flat tax supporting, libertarian hater of government of alls sorts and friend of the Cato Institute in the USA called Richard Teather – who works part time as a senior lecturer in tax at Bournemouth University to the undoubted misfortune of its students – to replace me. And no doubt he told them that all was fine with what was proposed, for they went ahead.

Except all was not fine. I have this morning been sent a copy of a letter dated today issued by Terry Le Sueur – Chief Minister of Jersey. In it he says:

On the back of the annual Crown Dependencies dinner hosted by Lord Bach from the Ministry of Justice, the Chief Minister of Guernsey and myself met yesterday with Stephen Timms at HM treasury. We discussed how the economic crisis is rapidly changing international and European norms for business taxation, much of which has been widely reported in the press. The views of the EU Member States seem to be evolving, and the UK felt that other Member States are increasingly unlikely to accept their stance that the fiscal regimes in the Crown Dependencies are fully compliant with the EU Code of Conduct on Business taxation. We have worked well with the UL’s support in implementing zero-ten corporation tax system, and the meeting also provided a useful opportunity to update the UK on plans to review our fiscal strategy. It is clear that we will need to continue to work in partnership with the UK on engagement with EU Member States so we can maintain a viable and competitive tax system supported by our European neighbours.

Let me decode that. First, the UK has withdrawn its support for Jersey is what I think that says. The reality is that if the UK is not willing to support the Crown Dependencies in the Code of Conduct Group then they can’t make the claim they are compliant to that Group because the UK is the only spokesperson they have go there, and I think this is what has actually happened. I think you can safely assume the same is true for the other Crown Dependencies. And of course the reason for the UK doing this is obvious: it is no longer willing to promote Jersey to the EU when  Jersey is willingly and with open arms welcoming to its shores companies claiming to be leaving the UK for tax reasons, as most of those who have claimed to have left the UK this year have done. Why should it?

Second, this throws the whole fiscal regimes of Jersey and Guernsey into the same nightmare scenario that I forecast yesterday is about to erupt over the Isle of Man – again as foretold by me several years ago. All those governments had more than adequate warning – albeit, as far as I can see from me alone with support from my Tax Justice Network colleagues  – that they were heading for the nightmare of running illegal and unsustainable tax systems, and we have been proven right.

Third, this means Jersey has put itself in the position of running an enormous fiscal deficit to pursue a tax haven policy only to find that the policy is illegal, must be altered – and cannot be changed to maintain what Senator le Sueur calls a ‘competitive tax system’ – by which he means one where non-residents pay nothing – without making that deficit much, much worse.

Which means we now face the prospect of all three of the Crown Dependencies going bankrupt rather sooner than I expected, about which in will try to blog later.

For now though, I do wonder whether Jersey should be taking issue with Teather.

And given I was right all along, if they’d like to call I’m still available to offer advice – if the fee is right.

Richard Murphy Europe, Guernsey, Isle of Man, Jersey

Isle of Man Today reports:

CHIEF Minister Tony Brown has warned [that] .. the cash-strapped UK is putting pressure on the Manx Government to revise the Island’s VAT sharing arrangements.

It is feared that between £50 million and £100 million of government revenue per year could be in jeopardy under any move to tighten the revenue sharing arrangements under the Customs agreement between the two countries.

Tynwald members have been invited to a special briefing on economic issues of ‘considerable importance to the Island’ tomorrow (Wednesday) morning.

The Manx Government’s current net revenue spending is £572 million.

With the UK public finances deteriorating rapidly, Gordon Brown’s administration is anxious to find new sources of tax revenue.

It is understood that one area coming under pressure from the UK is the Customs agreement with the Island, which currently provides more than half — over £300 million — of the Manx Government’s income.

Under the terms of the deal, the UK could give two years’ notice to terminate the agreement.

Richard Murphy Guernsey, Isle of Man, Jersey

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.

Richard Murphy Banking, Guernsey, Jersey, Secrecy jurisdictions

One of the things I never expected to do when I started campaigning on tax abuse was to help make television programmes. I am not sure how many I have done now, but tonight’s Panorama is something like the twentieth, and maybe the most significant/

Last week the IMF said Jersey was equal top in its ranking of FATF regulation compliance in the world.

Tonight that puff is blown apart. Jersey is shown to be rotten to the core.

Secret filming was done at just two locations to make this programme: Northern Rock, Guernsey and Lloyds, Jersey. I know. I was involved in planning it. The former offered the use of a shell corporation to get round the European Union Savings Tax Directive, the latter gloated about its abusive planning to help its customers evade tax, to which it stated it turned a blind eye.

How do I know both were willingly assisting tax evasion? Well, the European Union Savings Tax Directive official web site says:

In order to ensure the proper operation of the internal market and tackle the problem of tax evasion the savings tax Directive was adopted in June 2003.

The web site says the European Union Savings Tax Directive has a purpose – to stop evasion. It follows those who help people get round it help people evade tax. Northern Rock and Lloyds are doing that, in my opinion. And if these High Street names are, what happens elsewhere in the place?

Let me be candid: I love Jersey, and I hate corruption. Unfortunately far too many in Jersey are corrupt. Take this comment already on this blog from Jersey:

I doubt many people in Jersey’s finance industry will be losing much sleep about this.  The programme will only end up giving people ideas on how to reduce their tax.  Good publicity for Lloyds actually and the Island.

It shows how warped the view is in the island: local people think tax evasion is good for it.

I don’t.

I’m delighted Dave Hartnett agreed to be on the programme and is as robust as many will see him to be.

I think the pretence is over: now we know what Jersey and Guernsey supply: secrecy that hides corruption. It’s time to blow it apart. This programme starts that process.

And never again will someone from the Crown Dependencies be able to brag about how clean they are: these interviews show that when a person walks in off the street, unknown, they are sold corruption. The pretence is over. The truth is out. Now let’s act.

Richard Murphy Banking, Corruption, Guernsey, Jersey, Tax evasion

Cayman is posing a challenge. It claims that it is well regulated, as do many of its competitors. But what happens if the regulator is bust? Or has to impose swingeing cuts on its activities to meet budget constraints? What then? And what if, in any event, the rule of law fails because the government cannot pay its employees?

At least in theory this will happen this month in Cayman. Those Islands are insolvent. They cannot pay this month’s wage will. At least, not without the permission of the UK, and that permission has not been given because as yet the Islands have not got a viable plan to restore solvency.

I have described this as a ‘Lehman moment’ in a previous blog. I think it is, because just as when Lehman failed it became apparent that the market model for investment banking had changed forever, so to does the failure of Cayman represent such a moment. Cayman has proven that the model of the small island secrecy jurisdiction is unsustainable. If the biggest player in that market cannot make it pay enough to cover the needs of its local population and at the same time maintain the regulatory environment that is required then for all practical purposes the model has failed.

Now, I’m quite realistic: this does not mean that secrecy jurisdictions are going to disappear over night. Just as investment banking did not disappear with Lehman nor will secrecy jurisdictions go because Cayman has failed, with Jersey and Guernsey likely to follow. But Lehman did suggest that the relationship between the state and unregulated banking had changed. This is what Lord Turner was saying when making his much quoted comments last week. After Lehman the idea that anything the market wanted to do was acceptable ceased to be the regulators fall back position. Now that is true of offshore: just because the market wants it does not make it socially useful, socially acceptable or something that the state must support.

The first two of these conditions has always been true – even if quietly ignored.

The change is in the third condition. The reality that the financial risk in places like Cayman might be a contingent risk of the UK was first noted in a National Audit Office report in 2007. What was contingent then is reality now: the UK will not let Cayman borrow because that risk without Cayman raising sufficient revenue to repay the loans falls straight on the UK balance sheet. Insolvency in Jersey and Guernsey would have the same impact.

So that third condition – the relationship with the state has changed and for much the same reason: the implicit guarantee has become explicit.

This is, of course, of primary concern in the UK Crown Dependencies and Overseas Territories, but these are in most cases major market players. Taking out Lehman changed investment banking – although only now are we realising that not by enough. Maybe Chris Bryant at the FCO realised, when sending his letter, that real action is required this time. Certainly the message is blunt enough. He is saying

Do not assume tax haven status will continue

Raise new taxes

Assume the G20 will act

Assume the Foot Commission will not deliver good news

Assume the offshore market will decline

And more besides.

Is he also saying that the UK will not longer underpin offshore? It is hard to see how not.

Of course, I expect he will approve a loan to Cayman. But I really do hope and think the conditions will be tough. Real change will be required. And the implications are very clear: London is in as effective control in Cayman now as if it were Norfolk (where I live).

Of course, that means it joins the Turks & Caicos in this position. And de facto the Isle of Man – whose whole budget is dependent upon London, which subsidises it by £230 million a year – which is how the Isle of Man can afford the 0% tax on corporate profits that is driving Jersey and Guernsey to the wall. 

Suppose the UK now applies the same logic to all these places. What then? First, London will still get funds. This is not the end of the City as we know it.

Secondly, if these places charge tax (as it seems they must) then they will have to compete on a level playing field – i.e. without the massive state subsidies that ironically they have enjoyed to date – albeit from the implicit guarantee they have enjoyed.

Third, as I said on Channel Islands radio this morning – if the local finance sector is really as good and as honest as it claims then it can happily survive without either low taxes or, most especially the secrecy that permits it to handle tax evaded funds at present. And if it cannot compete without those two effective subsidies than it has no right to survive.

But of course the City and each of these places will look different as a result of change. It will be harder fro the City to pursue its socially useless activities – much of which is channelled through secrecy jurisdictions. Hedge funds will be taxed and accountable – which will reduce their impact on the world. Transparency and accountability will increase – as will the quality of governance to which offshore is an ever present implicit threat because of the necessary pretence that using it entails. And resources will be better allocated as a result. Risk to the UK tax payer will be reduced.

And yes, there is likely to be a crisis in the Crown Dependencies and Overseas Territories. Some of their trade will go – seeking other places for illicit funds until all boltholes are closed. If Switzerland is a precedent at least half the money in these places may be illicit. Many bankers, lawyers and accountants will be unemployed as a result. Please do not cry for them – those who handle stolen goods do not need sympathy.

But we will need to support those who really live and work in these places. Yes, I do think this a UK responsibility. And yes, I do think this may mean their sovereignty may be clipped. But if we are going to give support, help rebuild their economies, help bail out people who face ruin when property prices there plummet as financiers leave, then without doubt there will be a price to pay. That will be supervision, maybe membership of the EU, and an end to secrecy.

This is within the UK’s right to command now it has realised it holds the purse strings.

What is most important to note is that it has no right to walk away from this duty. It is trying to do so on banking – to the chagrin of Germany and France. It cannot be allowed to do so on this issue. It would be wholly unacceptable for the UK to bail out Cayman et al and allow the offshore abuse to continue. So action is needed now, on Cayman first, on the Isle of Man second, and with contingency plans for the Channel Islands third.

This what this Lehman moment means. Chris Bryant has shown bottle. let’s hope there’s plenty more of it in stock.

.

Richard Murphy Cayman, Economics, Ethics, Guernsey, Isle of Man, Jersey