The Times has reported (in edited form):
Wealthier investors who have stashed their cash in offshore bonds could lose their nest eggs after the schemes became embroiled in the Icelandic banking crisis. British investors have as much as £5 billion in the schemes, most of which have a minimum investment of £100,000 and are often used by people who intend to move or retire abroad.
Aegon Scottish Equitable International has told financial planners it cannot guarantee the investments of some of its offshore bondholders, which were invested in Kaupthing Singer & Friedlander Isle of Man, which went into liquidation last week. It is understood offshore bonds provided by Axa and Canada Life are also invested in Kaupthing Singer & Friedlander Isle of Man.
The British arm of the bank was bought by ING Direct, the Dutch bank, last week. However, Isle of Man deposits and investments were left out of the deal and now require the protection of the Isle of Man compensation scheme.
The Isle of Man government last week voted to increase the deposit protection to £50,000. However, advisers said that compensation would be negligible as it is limited to one claim per firm - regardless of how many policyholders have bonds linked to the bank.
Aegon Scottish Equitable International told advisers: "The Financial Service Compensation Scheme does not protect deposits with Kaupthing Singer & Friedlander. It is too early to know what the outcome of the liquidation will be."
The bank's website says: "The Administrator will be working towards an orderly repayment to depositors . . . [but] we cannot say how much or when."
Now let's turn this into plain English. What this means is that the much vaunted depositor protection scheme in the Isle of Man has been proven to be worth £50,000 for each investment company. I call that a fraud by the government of the Isle of Man, but then I'd expect nothing more of it.
Let's hope the credibility of the place is destroyed, forever.
Let's also hope that those seeking to flee have their tax affairs thoroughly investigated.
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It is actually worse than described in the preceding article. The main deceit is in the financing of the protection scheme. The “new improved” protection scheme that IOM is advertising will as the plan currently stands be financed purely from some of the 37 or so banks on the Island (I read somewhere 7 banks will participate but don’t know the excact number for sure) paying each £500,000 annually into a commond fund.
Doing the maths this means it will take decades if not centuries before the compensation is fully paid out with the large sums of money lost. The IOM “protection scheme” is therefore merely a smoke screen to prevent people from starting a general run on the banks there once they realize they have absolutely no security.
The only upside I can see about the whole thing is that my great great grandchildren will be reminded of me from time to time when a few pond occasionally drips into their account from this plan.
😯
One note I would like to add to the above.
I am not some rich tax evader. I was forced to give up my mainland UK bank when I moved abroad to follow my work when the UK bank refused to renew my VISA card because I now lived abroad. I don’t know the composition of people having accounts there judging from the various messages on the forums many of the people that have lost their money are expats that either work for a few years abroad or pensioners that intend to retire abroad. As it currently stands the UK government has confiscated large sums that were lent by Kaupthing IOM to Kaupthing UK and it looks like the government intend to use this to finance the mainland protection scheme
😈
Isn’t this exactly the same as the UK’s compensation scheme? Is the UK’s credibility to be destroyed also in that case?
No Joe unfortunately not. In the UK compensation will be paid out in a matter of weeks. In IOM the payout will take decades as the financing is not sufficient. I don’t know about you but I personally think that makes a big difference.
I don’t understand how they’re different. The UK scheme is paid out of levies to the banks, not government funds, exactly the same as the Isle of Man scheme. Can you explain the difference?
The fundamental difference is the I.O.M is a country in it’s own right, a Crown dependency of the “British Isles” and not part of the UK. I’m British, been in the I.O.M. for 5 years now and I can tell you that the financial situation is a minefield here, due to the ” Off Shore Investments” solutions(ahem) for all. At best imcompetance, at worst fraudulent.
Not one of the Kaupthing Singer and Friedlander (IOM) Ltd (KSF) victims was able to explain on a recent live internet debate on Isle of Man Today as to why they did not place their funds in the licensed offshore subsidiary of a major British bank. Or why many of them put all their eggs in the one basket of an Icelandic bank offshore?
Details of this Island’s limited Depositors Compensation Scheme was in the shop window on the internet and no secret. Why should the Island proffer 100% guaranteed security or total refinancing to those who placed funds over and above the advertised compensation limit?
They claim that, being expats with no UK address/domicile, the UK banks were no option due to anti-terrorism-money laundering laws.
Surely, the Islands have those also back to back with the UK and in spades? You still have to prove yourself.
A UK bank subsidiary is less likely to do a KSF due to UK influence with the parent even though nothing today is safe.
I suggest the real reason for some was that UK banks now provide the UK taxman with account details of their offshore UK citizen clients who have not actually emigrated from the UK permanently. This over and above the self-declaration provisions of the EU Savings Directive/Withholding tax arrangements on certain interest bearing accounts.
I am told that the UK leaned very heavily on British banks for this purpose and an Isle of Man financial adviser told me that he despaired of clients who opened accounts in their own names! Something similar happened in Ireland post-amnesty.
The Isle of Man global internet debate can be viewed on Isle of Man Today. Fifty seven of the live e-mails were from me “IOM RESIDENT”
Barrie Stevens. 4, Leigh Terrace, Douglas. Isle of Man
I can’t vouch for all depositors in offshore bank accounts but your insinuations certainly don’t apply in my case and in a lot of other cases I have read about as the majority of those who have come forward currently have no tax liability in the UK as they have lived abroad for extended periods Personally I have been working abroad for the last 6 years and have absolutely no tax liability in the UK and therefore nothing to hide. With regards to your point using British banks then I put money into Singer & Friedlander when it was a British bank and many others did the same in other British banks before these were bought by Icelandic banks. Personally I transferred the bulk of my funds to another bank before KSF went under as I followed the various threads on the internet which indicated there might be trouble ahead. However the reality is that most people do not have the time and the resources to carefully monitor the health of their banks continuously and frankly they shouldn’t have to if proper financial monitoring systems were in place.
In the big scheme of things the current situation is not sustainable as uncertainty only creates more problems with people panicking at the first sign of trouble. This in turns feed and accelerate the problems as people move their money between banks to avoid potential trouble spots and to get better protection. The fact is that NO bank can survive a major run from its depositors without external help.
When Ireland as one of the first offered 100% protection funds immediately started flowing towards it banks from abroad. The conclusion many of the European countries made from this is that homogeneous rules are needed and they now also offer full protection for savers.
My main comment with regards to the way IOM has handled the situation is that the IOM compensation scheme has been presented by the IOM as a compensation scheme on par with that in the UK when this is clearly not the case as the payout is likely to take decades.
In terms of the future of the IOM as an offshore banking hub then personally I think the IOM is in for a rough ride as many depositors now are likely to pull their money out of the Island.
Some things need explaining.
I believe the following to be correct but I stand to be corrected…Before I start….Will someone please tell me where the Isle of Man has promoted its scheme as being on par with the UK Scheme please?….
The Isle of Man Government as such has no legal existence although its departments do. Thus it cannot issue 100% unlimited guarantees. Where is the sovereign risk? They would have no value. Government’s annual income is about £567 million most of it needed to run the Island with about £387 million in reserves not counting various necessary operational and departmental budgetary reserve positions for on-going situations. Google “The Pink Book” Isle of Man Government on the Net. KSF (IOM) Ltd owes £850 million against 10,000 investors. Isle of Man Government is a form of British Government but the Isle of Man is a distinct fiscal entity with internal autonomous administration devolved. The entire existence of the Finance Sector and Island administration is built on clear constitutional borders. They don’t directly finance us. We don’t directly finance them. This makes for different tax laws. We have two separate tax bases and neither side is represented in the other’s legislature. You cannot raise and spend taxes without elected representation. This is why the UK Chancellor cannot use UK taxpayers’ money to bail out an Isle of Man problem. If the Island were in the UK not an issue. For similar reasons the UK cannot nationalise banks on the Island without legislation from Tynwald. UK legislation enabled UK banks to come here but Tynwald had to legislate back to back. Only an Order in Council can force the issue over Tynwald’s head and by convention that is not done unless UK and Crown matters are at stake and Tynwald does not co-operate. Nationalising UK banks as has partly happened may enable some political influence over Island subsidiaries but most of them are very low share capital issue Isle of Man (Ltd) incorporations. The Depositors Compensation Scheme was not a hook. It was always openly advertised as being limited but in the context that other small jurisdictions had no Scheme at all. It was never a shield or a cure. No Government can protect investors from their own folly of putting multiples of funds within the aegis of a scheme proffering a minimal compensation, once about £15,000 now 100% of £50,000 but funded by the banks, and that openly stated as probably taking many years. The Island is not in the EU nor the European Economic Area (EEA) if it were then £16,000 compensation would have to be paid out within three months. There has been talk of borrowings to refinance KSF (IOM) Ltd investors but against what? The minimal tax base of Isle of Man working residents? This would not feed the cat! The Isle of Man Government is underpinned by UK Sovereign Risk as the UK holds sovereignty of the Island. However, as the UK elected MPs are not represented in Tynwald they have no say in the Island’s budget or Supply Vote. Therefore the UK insists that the Island has a balanced budget and does not run up anything looking like a National Debt. Isle of Man Government, not being sovereign and having no legal existence outside of the British, state cannot pledge UK Sovereign risk as a guarantee as the UK has no local political control over Island internal fiscal policy. In other words. Tynwald has no power to wield in this situation, the Island is too poor in comparison and certainly has no fiduciary duty towards failed banks and their investors.
[…] the rest of this great post here […]
Some has just e-mailed me and said that Isle of Man reserves are £1.30 billion as a contingency against the hitherto bad financial situation of the Island’s electricity generator the MEA which got into heavy borrowings. The MEA is an entity separate from Isle of Man Government…I maybe read “The Pink Book” too quickly…Barrie Stevens 4 Leigh Terrace Douglas Isle of Man.
Klaus Eriksen. I am not making insinuations. Nothing personal at all! I did say “some” if you recall. I had trouble with the UK taxman years ago and it was then explained to me that working outside of the UK for years did not necessarily absolve one from UK tax liability. This topic is sometimes aired by qualified writers in “The Isle of Man Examiner” newspaper in the case of people who think that by moving to the Isle of Man they escape the tax net. I am absolutely no expert but I do claim to have kept a close watch on certain issues in the Isle of Man by way of picking holes in various agreements and treaties. I think I must have churned out about 500 letters to the local papers since about 1998 or so and done three or four documentaries on the radio with an established Manx Radio presenter plus backroom stuff. Accordingly, I am given to understand that, even if you work abroad for many years and no longer are UK Resident, there is ground for a complication when you return. If you return. I am told that if you are native UK born then you “Resident, Ordinarily Resident and Domiciled” within the UK tax area. I am told you never lose this as they measure it by your ancestral home and hearth. However, if you go to work overseas then you may not be physically Resident and, if you keep your money offshore, then provided none is earned or banked in the UK you probably have no tax liability. On the other hand you retain your other status of “Ordinarily Resident and Domiciled”. This is what I meant by UK banks being pressurised to reveal details of UK citizens who have offshore accounts with them and who have not actually and permanently emigrated out of the UK. They use the phrase “Cease to be regarded by the then Inland Revenue/ (HMRC)”. This warning has at times appeared on Isle of Man Government publications when encouraging new residents. I understand that one may work overseas for years and still retain a notional liability as above and that you never lose it. And if returning, the taxman is still entitled to ask where you got the money if you bring it back to the UK or buy a house. Point to an offshore account and that you were overseas for years should be OK. However some people are not as simple as that are they? Some have a hidden agenda as to what they took out of the UK before they left. Where they got it. What they got working overseas and so some people may just prefer not to use a UK bank but a “foreign” one at that which will not report or be liable to report. I am not referring to the EU Savings Directive. Finally, I find it very hard to believe that a bank when taken over does not write to its investors/savers/bondholders/borrowers and tell them of the change or that the bank taking over does not likewise convey that fact. Again, I am merely a keenly interested laymen and in no way an expert or practitioner. Barrie Stevens. 4, Leigh Terrace, Douglas, Isle of Man.
The greatest threat to offshore “tax efficient” finance centres like the Isle of Man and others will be the proposed new global financial order or the “New Bretton Woods Agreement”.
This will coincide with a new President of the USA and, whether or not it is Barak Obama a severe “tax haven” critic, the USA has itself embarked on a rare foray into socialism betting taxpayers’ money for generations to come. So has the UK and most of Europe.
I foresee the leaders UK and USA, along with France and Germany, acting in unison to use the forthcoming momentous developments to finish off if not restrict and/or closely regulate this whole offshore banking concept. This via the banks headquartered in their own jurisdictions so as not to interfere with such as Isle of Man and Channel Islands internal self-government.
They simply cannot afford to lose both future revenue and control of what will be very tight regulation and supervision so as to avoid the recent global fiscal calamities.
Barrie Stevens 4 Leigh Terrace Douglas
The Isle of Man, Jersey and Guernsey Finance Sectors may now be at risk if the new political control of Britain’s banks and tighter global regulation leads to Sterling problems and the at times reintroduction of exchange controls.
The effective state control or nationalisation of Britain’s salient banks spells the end of Thatcherism under which regulation was relaxed giving the City the power to deal in anything and everything as well the lifting of exchange controls thus leading to enormous capital flows.
It was the lifting of exchange controls in 1979 that enabled the Finance Sectors of the Isle of Man, Jersey and Guernsey full rein to expand and develop unrestricted in a global market. The reintroduction of exchange control’s in order to defend Sterling will reverse this effect as the Islands are still very much part of the old Sterling Area.
Previous Exchange Controls meant permission had to be sought to make major imports and purchases and also to move currency abroad even for holidays. Likewise, people were required by law to pay back so much of their credit card borrowings every month and if this was not done the banks were ordered to make the necessary compulsory deductions from current accounts. It was designed to stop over-borrowing and over-lending! Deja vu for some if us!
Maybe this is why the UK was wise enough to hold on to Sterling, not join the Euro and thus not come under control of the European Central Bank?
Barrie Stevens 4, Leigh Terrace, Douglas.
Correction to the above on Isle of Man Government Funds. These can be viewed in The Pink Book on the internet. It seems that annual income projected for 2008-9 is £599 million less expenditure of £567 million. Total reserves appear as £1.311 billion although included in this are various dedicated budgetary, operational, financial, currency, contingency and operational reserves. So you can see it is not possible for the Isle of Man to refinance all those who so far have lost funds in KSF (IOM) Ltd. Google Manx Radio on Talking Heads Listen Again as the Allan Bell Treasury Minister interview may be repeated. Treasury Minister Allan Bell will be on Manx Radio this Sunday on Sunday Opinion with Roger Watterson and which will be on the Listen Again feature. Allan Bell points out that KSF (IOM) Ltd was OK until this external crisis forced the issue and would have remained OK if the UK had not seized or frozen the funds. I feel that if these funds are restored promptly then although thee will be a big hole in the Finance Sector ship it should keep sailing. What do you think? Barrie Stevens 4 Leigh Terrace Douglas Isle of Man
On today’s Manx Radio “Talking Heads” Isle of Man Treasury Minister Allan Bell admitted that the outlook for such as Offshore banking is uncertain following UK Government penetration of banks by way of part nationalisation combined with the planned new international regulation of banking by way of “a whole new ball game” (My words)…He did both say and that nothing would ever be quite the same again. Barrie Stevens 4 Leigh Terrace Douglas Isle of Man.
Barry,
You seem to be very negative about the bank collapse.
So far, as a fellow depositor, we have had a lot of support from people local to the island, as well as people not living on the island as we believe this impacts everyone who deal with the island.
You have made valid comments so far and we appreciate your comments here and elsewhere, although we are fighting for our life savings, and for the future of our children.
I think the bank was a well respected bank and offered excellent interest rates. There are also various high profile depositors, and surely all of us couldn’t have been wrong when we looked at the bank’s solvency.
KSF IOM Depositor. I do not think that this site is about those who are KSF etc Victims!..No you and the others were not wrong but I suspect I may be older than you..Also I have been IOM based for long-time!…It is known that Offshore banks are “shells” despite what they say. You are dependent on the goodwill of the parent. UK banks probably OK in a bust-up. Iceland outside of British influence really. Outside of the UK. The Isle of Man has only ever promised what it says on the tin. The Depositors Compensation Scheme is what it is and always was but none of the others even had that on offer! You may have been badly advised but if you step outside of the UK this is the risk. I get angry when I write these things and no one reads them and then say ” No one told me!” They did! Sunday papers. Radio 4. Check it! Over the years! The solvency issue does not apply Offshore these are insular incorporated companies with minimal shareholdings, licensed but that is all. Maybe people should have smelled a “long-tail” (Rat) “I beg your pardon? I never promised you a rose garden!” That sums it up really. I have always known and as for the locals how many know just how poor in cash terms the Isle of Man really is? It is not the poor man’s Switzlerland..Barrie Stevens. 4, Leigh Terrace, Douglas, Isle of Man,
The main problem facing the KSF IOM depositors is that most of the funds in the IOM subsidiary were ceased by the UK and Iceland when they respectively took over / nationalized KSF in the UK and Iceland. Hence the IOM depositors are currently bankrolling the compensation schemes in both countries. I expect the courts will be busy for years unless that money is returned to the IOM subsidiary
Look around the Net.The FSC admits that it did oversee a transfer of KSF (IOM) Ltd funds from the Island to the UK to stop them going to Iceland. Then the UK made an arrest and now holds about £600 million says Treasury Minister Allan Bell. Who owns or controls the FSC? Not the Isle of Man. Outside Isle of Man political control. Not part of Isle of Man Treasury. It was a mystery where they came from when they got here tho’ the Isle of Man had to pay the bill. The FSC is a UK entity offshore I suggest. Same for Jersey and Guernsey. Remember IOM Chief Minister declared on Manx Radio that he was a politician and could not speak for the Financial Supervision Commission? I recall the mystery of the building in Buck’s Road in Douglas. Very nice! We all thought it was MI5! It sort of came down like a Tardis. That is your homework for the weekend. Who owns or controls the FSC as the Isle of Man government and politicians do not? But I have had a long day since 5 am. Naughty to suggest the FSC is under UK control! Naughty to suggest that this is why the money is in the UK and not the Isle of Man. If the money had been in the IOM then the bank would not have crashed. Look at Mr Aspden’s (FSC) comment about the transfer but it is your money so I am off to sleep. Done plenty! Of course if a UK entity by proxy did oversee the funds to the UK and it could be proven then this negates the IOM Compensation Scheme as such should not then be necessary. If the movement of funds in substantial form was overseen by the FSC as a defensive measure as has been stated on the Net then sadly the banks may hold back on their £500,000 contributions when they come due saying that the funds were moved from the Island by a UK controlled entity rather than commercial bank failure and thus they are not responsibe…Think of the interest!. Think of the compensation for all that suffering, consequential loss and liability! Barrie Stevens. 4, Leigh Terrace, Douglas, Isle of Man.
“Let’s hope the credibility of the place is destroyed, forever”
That just shows what a small minded, nasty, individual you are and outlines the real reasons for your hatred for the IOM in particular. The IOM is no different to ANY other offshore centre when it comes to compensation. Jersey = NO SCHEME AT ALL. Guernsey = NO SCHEME AT ALL. Cayman = NO SCHEME AT ALL. Bermuda = NO SCHEME AT ALL. Gibralter (an EU based offshore centre) = less protection than the IOM.
You convieniently miss these points in your pedantic, narrow minded, and totally blind hatred for the IOM.
DB
I confess I found your comments quite amusing. Frank Walker, until very recently the Chief Minister of Jersey has described me as an enemy of that place
I have certainly also had a disagreement with ministers in Guernsey and Gibraltar. I am not that popular in the city of London.
I have absolutely no specific argument with the Isle of Man. I dislike all tax havens. I dislike all jurisdictions that set out to undermine the democratic process.
The Isle of Man does, but I can assure you that neither I nor any of my colleagues in the tax Justice network it out in isolation: we want to wish all such practices wherever they occur. please do not take it personally.
Regards
Richard
The above item relating to potential constitutional change consequent upon the UK part nationalising UK banks so as to pentrate the offshore banking industry in a way that could not be done by conventional constitutional means has appeared under my by-line in the Guernsey Press and Jersey Evening Post where it has prominent headlines (17 October 2008). It also appears in those papers’ respective websites “This is Jersey/Guernsey” Barrie Stevens. 4, Leigh Terrace, Douglas. Isle of Man.
BD I think what Mr Murphy actually meant was that the Isle of Man compensation scheme is really rather ineffectual so as make the Island just like the other small jurisdictions for practical purposes. For instance, in an aside on the Isle of Man Today website, one of the senior Financial Supervision Commission officials drops the bombshell that not all of the banks and building societies recruited into the Depositors Compensation Scheme (DCS), now proffering 100% of up to £50,000 in time, are big enough to be able to afford the £500,000 annual levy or contribution to the settlement fund. In other words, we were wrongly informed. The DCS is not funded by a £500,000 annual levy on specified banks following a collapse. It is funded by a levy of…..up to £500,000 on those banks that can afford it…..How many are in the premier league? We are not told. Not quite so kosher as before is it? Offshore banks pleading poverty! Barring a miracle buyer together with the recovery of funds frozen in London, KSF (IOM) Ltd may well go into liquidation this Friday and according to Alan Bell Treasury Minister, as the DCS runs from April to April it should be possible to raise some funds for the scheme. Assuming that the banks can afford it!
Allan Bell is also not over-confident of recovering some £2.70 million of Isle of Man Government funds lodged with the bank. Considering the potential sums outstanding this is rather like the Church levying the charge of “Peter’s Pence” in order to fund the building of St Peter’s Basilica in Rome. Not all of that money found its way to Rome. Some was diverted to build London’s St. Paul’s Cathedral. Hence, “Robbing Peter to pay Paul”. How apt! Barrie Stevens. 4, Leigh Terrace, Douglas, Isle of Man.
I am advised by one personally concerned with the KSF (IOM) Ltd collapse as follows. ‘Your postings are not so much ‘facts’ as your own personal spin on the situation. There’s a huge amount of innuendo in what you’ve posted, and some of it is just plain factually wrong. The FSC was established in 1983, as a result of an enquiry ordered by Tynwald into the collapse of the Savings and Investment Bank. The enquiry was conducted by officials from the Bank of England, who were paid by the Isle of Man Government. That is not unusual – the Crown Dependencies often commission official advice and inspections from the relevant UK bodies, as it’s the easiest place to buy the relevant expertise. The FSC was established by Act of Tynwald, not because of any pressure from the UK. The commission members are appointed by Tynwald following nominations by the Manx Treasury. They can be removed by Tynwald. This makes them independent of the Chief Minister and the Government, in that they answer to Tynwald only. In no way is the FSC appointed by or answerable to the UK government.’ The above was posted as a response to my posting on the KSF(IOM) Ltd depositors united action website. I disagree that there was not behind the scenes pressure from the UK on the matter of establishing the FSC and it, the UK, does act like some US Federal Marshall in small-town America. The Channel Islands came under the same suggestive force from the metropolitan power and have their FSC equivalents. I prefer to think that the UK does in fact exert a great deal of behind-the-scenes power if not force. Likewise, it cannot be denied that the Isle of Man Financial Supervision Commission did not arrest or detain the KSF (IOM) Ltd funds in the Isle of Man for safekeeping but instead chose to send them to London so as to prevent them being sent to Iceland. I suggest that this smacks of UK influence as borne out by the turn of events. Perhaps the FSC has no power of seizure and detention of finds on the Island? It clearly has power to order the funds away out of the Isle of Man and into UK jurisdiction. “Curioser and curioser”. The consequence has been that depositors in the Isle of Man, who should have been protected by the FSC, have seen their moneys sent out of Isle of Man Government jurisdiction and regulation to the capital city of the metropolitan power where they may well yet end up being used to offset any losses incurred by UK entities in the face of Icelandic default, or at least, long-term delay in reaching an effective settlement. Barrie Stevens. 4, Leigh Terrace, Douglas, Isle of Man.
Sorry but I don’t find your comments amusing I actually find you are a blinkered pedant and I stand by the comments regarding your particular dislike of the Isle of Man. How exactly do offshore centres set out to undermine the democratic process? The IOM in particular is the oldest democratically elected Parliament in the world. UK tax law allows UK residents to legitimately hold assets offshore providing they are declared. Virtually all offshore structuring is within the law otherwise HMRC would (and will) act. The IOM & Channel Islands banking system funnels virtually all its money back onshore to be lent out by UK parents so they assist the UK banks in the cheap raising of capital from non-domestic markets. No doubt you’ll get back on to your favourite hobby horse being VAT – which Manx residents pay on everything and which is shared with the UK.
Many KSF Depositors like myself had their savings temporarily deposited with Derbyshire Offshore the offshore arm of the Derbyshire Building Society when they decided to sell out to KSF IOM.
DB
My comments were not meant to be amusing: they are intended to stop abuse
For more information search Google for Creating Turmoil Tax and you’ll find a full explanation in the resulting publication – or search this site for the same thing
Richard
DBThe Isle of Man does not have the world’s oldest democratically elected parliament. Tynwald is undoubtedly of Viking descent but it was anglicised long ago. Even the House of Keys is not Manx. The original MHKs were in fact the present Coroner’s assistants or Lockmen. The Anglo-Normans discovered these lawmakers of Viking descent called Lagman (Lawmen) and then Anglicised it to Lockmen and invented the collective noun Keys for a house of Lockmen. It is the same in Scandinavia and I got this from a Swedish lawyer on the Island. It is not Gaelic for the “The twenty four”. The UK or Britain took over the sovereignty of the Island in 1760 and then created Tynwald Hill at Fairfield on a previous Neolithic site. The original Tynwald is some distance away and three are three others. The UK laid out the processional path and built the Chapel Royal at one end as part of the Anglican dominance associated with government. So Tynwald is very much a British constitutional ceremony. The House of Keys was appointed and not democratically elected until about 1865 at UK insistence on reform. Even then the Keys and Tynwald were not fully democratic until the 1920s-30s and for this see Manx Memories and Movements by Norris in the Manx Museum bookshop. There was no income tax in the Island until 1918 when the UK threatened to legislate over Tynwald’s head a power which it still retains. The rich paid no tax and all taxes fell on the poor because there was only a sales and services tax. Despite Tax Information Exchange Agreements with the UK and elsewhere and EU Savings Directive/Withholding Tax the UK and other gatherer have no power to make direct tax garnishee on the Isle of Man and vice versa. I moved to the Island with a tax problem and the taxman gave up! I did eventually settle with them but not financially. I supplied information and they wrote the tax off. So you see that still makes it a tax haven! Barrie Stevens. 4, Leigh Terrace, Douglas. Isle of Man.
There are postive provisions with UK Tax legislation to provide gross roll up for assets held within offshore bonds.
This is not tax evasion, there are specific provisions within UK legislation.
Could you please explain how people using these products are ‘seeking to flee’?
Jim Hello! I am absolutely not a financial or legal practitioner. I have just been a close observer of the Manx scene and been invited at times as a guest on Manx Radio current affairs slots “Sunday Opinion” and “Perspective” having many hundreds of letters published in the local papers..so Editors must think I have something valid to say?…I am advised that one can make these investments offshore and defer tax on interest until importing the funds back into the UK/returning to UK. I am not sure that this applies to savings accounts offshore. This may or may not be utilised by Expats. Consequently, it is possible to defer domestic income tax liability of say 40% and then come back into the fold as it were when either not working or retired and the tax liability is less according to the stage in your life when it counts as income…Now tell me please is this correct? If so then there are those who might say that it is legal but it comes under not tax evasion but tax “avoision”. I would appreciate your advice on these points. Barrie Stevens. Douglas. Isle of Man.
Jim
Yes, some products are legal
But the whole structure is corrupt: not the tax rate, the Isle of Man can do what it likes with that. What is corrupt is the deliberate structure of secrecy and non-cooperation that allows people to abuse that tax rate.
And anyone who knows anything about the Isle of Man who denies that its banks are knowingly used to evade tax is naive, stupid or worse. The evidence is overwhelming that they are, and knowingly so.
Richard
The Isle of Man is being quietly cast loose to fend for itself by way of subtle changes to the long-standing constitutional and fiscal relationship.
Change to the Customs and Excise Agreement, which accounts for 80% of Isle of Man Government income, may now see it terminated with two years notice either side.
No longer loaded artificially in favour of the Isle of Man, it is now based upon the performance of both UK and Island economies and, it is admitted, will create a hard to fill void in future revenues.
Should the UK threaten to cast loose then that two years notice serves to give the Island time to adjust to the probably irreplaceable loss of government income and for the metropolitan power to fulfil its “good government” obligations.
Then there is the ending of the mutual health agreement by way of NHS reciprocity and charging to Island funds for off-Island treatments.
Many years ago the Island withdrew its portion of National Insurance funds from the UK national scheme and invested them together with subsequent Manx contributions.
Recent years had seen the Island receive devolved powers from the UK to enter into a series of Tax Information Exchange Agreements with other countries including the UK.
The EU Savings Directive, together with its disclosure-cum-withholding tax options, is now about to be tightened up supported by a mysterious comment regarding “incentives”.
Attempts at changing the Protocol 3 relationship with the EU via the UK failed. The Island is “in” for trade and “out” for anything else including most of its Finance Sector Services.
Brussels and the UK do not want the Island inside the EU unless absorbed into a federally devolved Britain within a “Europe of the Regions”. The Island is too small a non-productive offshore-liability to be of value to the EU standing alone and does not have the capacity to meet EU acquis communitaire obligations.
The International Identity Agreement accorded by the UK acknowledges that the Island has an international profile divergent from the metropolitan power within a changing constitutional relationship.
Latterly, the UK has seized hundreds of millions of pounds formerly deposited with Icelandic controlled bank KSF (IOM) Ltd under the pretext that possession is nine points of the law. The Chief Minister now admits that this money is most probably irrecoverable.
The UK Chancellor declares that there is no obligation to secure KSF (IOM) LTD clients, that if the UK did so it would not be done lightly but commensurate with a review of the Island’s tax and regulatory relationship with the UK.
Would the Island’s establishment agree to KSF investors being compensated at the price of UK interference with internal taxation and fiscal autonomy?
If the UK does not return the funds, or compensate KSF investors in view of Isle of Man Government’s evident powerlessness, then the Finance Sector is effectively finished and the Island made vulnerable to politically enforced change from London and Brussels. “Catch 22!”
Barrie Stevens. 4, Leigh Terrace, Douglas, Isle of Man.
Well now, what about this white list.I was always told that white signifies purity?