The Channel Island’s respond to the tax amnesty

Posted on

It's fascinating to read the response to the UK's 'tax amnesty' in the Channel Islands. Remember, the information the Revenue have got on half a million or more accounts only comes from there and the Isle of Man, with Jersey having more cash than the others by some way on deposit with its banks.

Geoff Cook of Jersey Finance (and before that HSBC - the finance industry colonise such bodies) said in the Jersey Evening Post (who don't put this stuff on the web):

My view is that it will probably not be as impactful (sic) as press speculation [suggests].

This he says is because a) only £60 billion of the deposits in Jersey are in sterling b) Jersey banks have been telling people in the UK that it's not worth their while opening accounts there c) HSBC Jersey had clients in 207 countries, so the UK is not significant. Candidly Geoff, I don't believe a word of those excuses, expect that I'm sure HSBC did have that spread of clients rather as I on average have readers of this blog in about 50 countries every day - even if only one or two in most of them.

For once KPMG were more open. Their tax director, Reg Day said:

Banks in particular are going to be inundated with requests from people in the UK about their historic arrangements.

Which is realistic. He also added:

If there were found to be irregularities there is then the question of whether offshore bank staff would be obliged to file reports with the relevant anti-money laundering authorities

I'm sure Reg is right. But more important is the fact that if he knows the banks are going to be inundated, why were no such reports (not one) filed last year by a bank in Jersey? Who has not been complying with the anti-money laundering rules to date? Or is it just that they've relied on the excuse put forward by Jane Stubbs, tax partner with PWC in Jersey, and an old sparring partner of mine when she said:

Technically the banks were not responsible for their customer's tax affairs

Oh so true Jane, but I do notice your dependence upon that "technically". I'd also remind you that the banks are solely responsible for their suspicions, and had a duty to report if they had any of those. But apparently none did. Which was simply an impossibility.

Jane did however follow up with this absurd comment:

Jersey has always said it did not want to be a place where people came to hide, and for us the UK is the mothership so we need a good and positive relationship.

In which case Jane please tell me why Jersey did not opt for automatic information exchange under the EU Savings Directive? You know it didn't. You know that was done to assist secrecy. And so, to be honest, I find your comments incredible.

Meantime in Guernsey, Ernst & Young partner Graham Parrott has been commenting. He seems to join in the contempt that has been generally apparent from the higher echelons of the profession on this issue:

Quite how many people will be able, let alone willing, to come forward by the 22 June deadline is questionable, those who do being prompted by the stick, which accompanies this rather small carrot, of the Revenue's ability to get details from some UK banks of off-shore accounts held by people in the UK. Last year it was Barclays, now Lloyds TSB, HSBC, HBOS and RBS, with possibly more to come.

More tellingly though he added:

The impact in Guernsey is likely to be limited as to the extent it means hidden income is declared - even if the money leaves the island, it is a move that should be embraced. The reality is that this is not business we want.

Which does not of course mean that the impact will be limited. But perhaps I'll remind all at E & Y of this some day:

We should all pay what we owe - otherwise everyone else has to pay more.

It took a long time to get there, but finally I found a single comment from those who've talked about this in the Channel Islands which seemed credible.