Tax Research UK

There’s a lovely page on the States of Jersey Treasury Department website that says with regard to its new law allowing the establishment of foundations:

Foundations (Jersey) Law 200-

Advice for Jersey residents considering registering a ‘Foundation’

It is advisable that, if a Jersey resident is considering registering a Foundation or has any interest in a Foundation he or she should provide the Income Tax Office with full details as to the reason(s) for doing so and the purpose of the Foundation and seek pre-clearance from the Comptroller before going ahead.

Failure to do so will lead the Comptroller to take the view that creating a Foundation has as one of the purposes, or the main purpose, the avoidance of Jersey tax.

The Comptroller will counteract such avoidance under the provisions of Article 134A of the Income Tax (Jersey) Law 1961.

Comptroller of Taxes

12 December 2009

So now we have incontrovertible proof: Jersey has deliberately created a structure for the use of those not resident in its jurisdiction which it knows has the sole or main purpose of tax avoidance (at best) which they consider best tackled by use of a General Anti-Avoidance Principle (for that is what their section 134A is).

If you wanted proof that everything I and others have said here over many years is true – here it is.

This proves Jersey is, without doubt, a secrecy jurisdiction. Secrecy jurisdictions are places that intentionally create regulation for the primary benefit and use of those not resident in their geographical domain. That regulation is designed to undermine the legislation or regulation of another jurisdiction. To facilitate its use secrecy jurisdictions also 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.

How can any place claim to be internationally cooperative or compliant on tax when this is what they knowingly, deliberately and wilfully do?

Note the phrase 200- simply means the final date on which the law is to be approved by the UK’s Privy Council on behalf of the Queen has yet to be advised.

Richard Murphy Ethics, Jersey, Tax avoidance

A commentator on this blog has said, referring to the UK’s requirement that the Crown Dependencies drop their zero / ten tax proposals, and quoting me in the first instance:

RM:  zero/ten is dead - unfortunately IOM and Jersey seem to be slow in realising this

Comment: Don’t believe this is true. I think the Islands are extremely savvy and they know perfectly well that zero/ten is "dead" but it works for them so why bury it any faster than they have to? Here in IOM I am pretty sure that when they first proposed it they knew the full package wouldn’t pass EU muster and that is why we only found out about the distributable profits charge on resident companies 3 years later. Another 3 years on when that hit the buffers we got the attribution regime and now a full 10 years on the rumblings are that zero/ten doesn’t cut it at all. Another model will be on the drawing board as we speak. It is a game of chess in which the Islands work out their next move AND the opposition’s next move in the fairly certain knowledge that it will take the lumbering, corrupt, bureaucratic giant a good while to reach the same conclusion.

I admire the admission of cynicism in the official approach to cooperation on tax matters that this comment reveals. I have every reason to think that this is exactly the approach the islands take.

I do, however, think the commentator gives the island’s far too much credit. I was, to some limited extent, involved in this whole process in Jersey. They, like the Isle of Man (with Guernsey, as ever, tagging along) thought zero / ten was really smart. Indeed, I recall an IoM lawyer calling it “a smart piece of footwork” back in 2004 or 2005. And the principle of zero / ten was approved by the EU in 2003.

The difficulty was that having proposed it the islands realised that they could not live with it. the failure of zero / ten has nothing to do with the EU or the UK: if the islands had really mean to charge zero per cent tax on companies there was nothing the UK or the EU could have done to stop them.

But what they realised, especially in the case of Jersey, was that they could not live without maybe a third of their tax revenues. As a result they tried to get round the nightmare they had created for themselves by re-introducing the ‘ring fences’ the EU had tried to outlaw – specifically charging locally owned companies one rate of tax and those operating ‘elsewhere’ to zero tax.

It was not zero / ten that failed. It was the incompetence and dishonesty of local politicians, civil servants and tax advisers in proposing a solution for the islands that failed to deliver the tax revenues that met the island’s needs that caused the failure.

And because the cynicism has not gone away I suspect the next proposed solution will fail too.

Richard Murphy Guernsey, Isle of Man, Jersey

Deadline passes for disclosure deal » Business » This Is Jersey.

The Jersey Evening Press reports:

ANY UK residents who did not meet a deadline to declare the contents of offshore bank accounts now face the prospect of immediate investigation for tax evasion.

But it is expected that very few Jersey account holders would have been among those rushing to tell HM Revenue & Customs that they had money secretly squirreled away here.

The secretary of the Jersey Bankers Association, Martyn Scriven, said that there may well have been a rush for information in ‘secrecy jurisdictions’ like Switzerland and Liechtenstein. But he said that it was much less likely that Jersey account holders would be among those confessing to having withheld details of assets from HMRC.

43% of all Jersey account holders from the EU did not information exchange with their domestic tax authority in 2008 under the European Union Savings Tax Directive. The only likely reason for not doing so was tax evasion.

On which basis it’s likely that tens of thousands of account holders in Jersey should have declared liabilities now, and haven’t.

But the bankers go on persuading themselves all is OK without ever seeking the evidence as to what’s really happening. And yet we apparently have to trust them on fiancial regulation.

I don’t.

PS One curious thing - they’re now using the language of secrecy jurisdictions, first widely promoted on this blog.

Richard Murphy Banking, Jersey, Tax evasion

The Jersey Evening Post reports:

THE cost of going to doctors and dentists is now so high that more than half of Islanders are not having routine health checks, says a major new study.

It costs £32 to see a GP in Jersey.

The shape of things to come under the Tories in the UK?

I suspect so.

Richard Murphy Conservatives, Jersey

I welcome UK bonus tax escapees, says minister » Business » This Is Jersey.

RICH City workers fleeing the UK to avoid rising tax rates will be welcomed into Jersey, according to the politician who approves residency applications from wealthy immigrants.

Housing Minister Terry Le Main sees a ‘huge benefit’ to the Island if British financiers, angered by Labour’s new 50% tax rate and one-off 50% levy on all banker bonuses over £25,000, move across the Channel.

But as the print version of the paper (which I’ve got - miracles never cease given it was published at lunchtime) makes clear - there have been just 10 such people arriving in Jersey this year.

So this is just more completely bogus hype for something that is not happening.

Richard Murphy Jersey

FT.com / Personal Finance - IHT avoidance schemes face scrutiny.

As the FT notes:

As part of the new measures to clamp down on tax avoidance, UK residents will also be obliged to tell the British tax authorities when they open certain foreign bank accounts.

The new reporting requirement will apply to UK residents opening accounts in “certain” offshore jurisdictions, with heavy penalties of up to 200 per cent of unpaid tax for those who fail to comply.

Accountants believe the new rule is likely to be applied in tax havens, such as the Channel Islands, a popular financial centre for UK residents.

The Revenue have had enough of cheating in the Channel Islands and Isle of Man. And rightly so. So things are going to get tough for their banks and for their trust companies - because UK residents are going to have to report if they use them.

There’s no excuse now for a bank in these places saying it did not know that a customer was tax evading in the UK: I think they will have to ask in future and make sure declaration is made or not provide services.

But I bet they won’t do that, all the same. And if they don’t it will prove what I’ve always suspected - that they deliberately want tax evaded funds. If they don’t they’ve certainly been very good at getting them none the less.

Richard Murphy Banking, Guernsey, Isle of Man, Jersey, Tax evasion