The New York Times asks that question of Guy Hands who claims to have quit the UK to take up tax residency in Guernsey. As they say:
[T]he most renowned British private equity financier has not abandoned the land of his birth just for the seaside splendor. What has mainly drawn him to Guernsey are its welcoming tax rates — 20 percent on income and, crucially for those in the business of buying and selling assets, zero tax on capital gains.
The question is: Will he get away with it?
I’d add a second question: should he get away with it. But I answer that in the article:
“My opinion is that he is free-riding,” said Richard Murphy, the founder of Tax Research U.K. and an adviser to the British government on tax evasion techniques. “Guy Hands wants to make money out of the U.K. economy and the structures and guarantees we provide but he does not want to pay for it.”
So let’s return to the first question. The answer is no one is sure: the UK’s tax residency laws are in a mess an clarity is now needed, urgently.
I have proposed a relatively simple rule for those with British passports: they should pay UK tax wherever they live in the world unless they can prove they are paying tax on their world wide income to state with a system similar to to that in the UK. I think you should presume that tax havens need not apply — Guernsey included (no capital gains tax for a start).
And I’d simplify the rules for those coming to the UK. Four years on a remittance basis and then taxed on world wide income. So secondees can have their time without re-organising their affairs and then they pay full whack — because they’re getting full whack in exchange.
It’s simple, logical, straight-forward, certain, and all those other qualities the tax profession says it loves. The only problem is it would collect tax by the bucket load — and rightly so (because those ‘exiles’ all have the right to return — so have the implicit guarantee of UK state services available to them at any time — plus UK protection — for which they should pay). So the tax profession don’t like it — giving a complete lie to all their demands for simple taxes.
In that case, and because it is clear that it is only hypocrisy that allows these loop holes to continue, let’s go back to the second question: should ‘tax exiles’ be allowed to free-ride the UK? Clearly not. To use the UK to make money and then seek not to pay tax on the resulting gain by gaming the rules is straightforward ethical abuse. And since ethics do inform legislation and reform is needed here, meaning that ethics are in play, let’s create a system that is, as I have suggested, simple, fair, transparent, easy for 99% of people, and collects tax form those who have tried to free-ride to date.
I’m aware that there will be plenty of objections from the usual suspects. It’s our job to ignore them. It’s the job of the UK to collect the tax owing to it and prevent abuse of the system. And I think the current residence rules are being abused. That’s why it is time for change.
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Richard
Have you not heard of the EU ? The UK is a member. Members of the EU have absolute freedom of movement and freedom of capital within the EU. What you are suggesting re. UK passport holders is simply non-compliant.
Guernsey (and Jersey and the Isle of Man) for immigration and nationality purposes only are part of the UK’s Common Travel Area, and thus part of the EU travel zone.
So what if Guernsey does not have capital gains tax ? Neither does Belgium. Restricting movement of UK nationals to only those countries with a similar tax system to the UK has absolutely no chance.
Rupert
I place no credibility on your comments
Candidly – I have no clue who Arnald is – so how can I attach that much to his comments either?
What I do know is that your comments look very much like the bullying, malevolent, and just down right nasty comments of a person I would expect to work in financial services in a place like Guernsey
Of course people don’t complain – they know people like you would sack them
It’s a totalitarian location in that sense, wouldn’t you agree? And you’re right there in the secret police as an informer by the look of it
Hope it makes you feel good
Richard
Rupert
I didn’t say people couldn’t go there
I said they’d pay UK tax if they did
That’s fine under UK rules
Try challenging it
Richard
The sooner we take all private property out of the hands of these capitalist freeloaders the better it will be for the man in the street. People like Hands aren’t bigger than us so they don’t need bigger houses. Let’s put him in a flat in Peckham and open up all his houses and hotels to the workers. I’d leek to see how much corporate financing/slave wage exploitation he could manage on the minimum wage.
He says he wants to live in Guernsey but if the Germans invaded again you can bet he’d be on the first boat back to Blighty. Actions speak louder than words.
Richard
Anything which discourages people from moving within the EU, such as a tax charge on emigration, is likely to be deemed illegal under EU rules. It doesn’t matter a jot that its legal in the UK. EU law overrides domestic UK law. Germany, France, Belgium and Holland have all lost EU cases on the application of emigration/departure taxes when residents have left for another EU country.
Haha
Quality.
Hey Rupert, I didn’t get fired. They’re starting to censor me on thisisguernsey now. I imagine I’ve been complained about. I could quite simply use another moniker, something that will come top of Google searches everytime.
Even the noticeable change of rhetoric from the ‘tax experts’ resident in the Guernsey Press, spreading false impressions of decency and sophistication as propaganda for a deeply resented industry, id not enough to make anything you say reasonable.
If you want to not pay tax in the UK, move everything out of the UK. You should not be able to pick and choose tax strategies because of the privilege of wealth.
Social improvement through taxes cannot be viewed as optional just because you’re rich. The cash was made using society, pay for it.
Freeloaders. And you’re an apologist. Cheers David.
Arnald
I wouldn’t count your chickens quite yet on not being fired.
What’s very interesting is that the fact that you don’t work in compliance within the Guernsey finance industry at all, do you ? So your postings on these and other blogs about “what you see on a day to day basis” is complete fabrication, isn’t it ? So why would somebody invent such false propaganda ? It actually undermines the credibility of the Tax Research blog. I’m sure Richard thought all the time that you were adding weight to his postings on the Guernsey and Jersey finance industries as a supposed “insider”. Oh well, now we know.
And no, the finance industry in Guernsey is not “deeply resented”. Sure, there is a minority of a few hundred (population 62,000 remember) like you who resent it and would like to see it disappear, but apart from you they aren’t prepared to do it in such a disgraceful manner through pretending to be “on the inside”.
Richard
Arnald has frequently posted on your site, falsely claiming to work for a Guernsey financial services institution, and claiming that he sees all kinds of shenagigans going on every day. To suit his own anti-offshore finance industry agenda, he deliberately paints a picture which is intended to convince others that he “knows from the inside” what is going on. He does NOT work in the finance industry at all. I call that underhand and despicable. How many people on this site have been falsely influenced by his claims ?
No – it doesn’t make me feel good at all. It sickens me that somebody would pretend to be a false whistleblower and try to mislead others.
Look at Arnald’s comments below under the thread “Useless, Wasted Bureaucracy”:
1. July 31st, 2009 at 17:00 | #15
Reply | Quote
I work in the private sector. I clock watch. I juggle with paper. I read Richard Murphy and laugh at the libertarians.
I get my job done.
I get paid more than most.
The private sector does not have all the answers. The MD of my company is a golf playing racist bigot that only talks about sex and money. He got a six figure bonus last year.
I am willing a move into the public sector to be able to use my intelligence for the good of society, not to create a bonus for a sociopathic ignoramus. I’ll happily take a large wage cut to do it.
I’m in Guernsey where even the (non unionised) poorly paid think the public sector is evil. That’s how engrained the facetious right wing press opinion writers have spoiled a perfectly decent bunch of people.
Chasing what? Junk.
Arnald already works in the public, not-for-profit sector, not the private sector. He doesn’t have an MD, so his “MD” does not earn a six-figure bonus. Neither does his boss, who I happen to know. Very fortunately for Arnald, I now know that his comments are aimed at his “mythical” MD, not at his actual boss. Imagine if his boss believed that those comments were actually aimed at him ?
You can say what you like, but it doesn’t half put a different complexion on Arnald’s postings. And there was me, innocently believing that he just happened to work for an offshore financial services organisation which just hadn’t embraced the change that other organisations in the Channel Islands have embraced.
And no, I wouldn’t sack people for holding left-wing, anti-offshore finance industry views. But I would seriously question why they would wish to work in such an industry when there are so many other employment options available. I would certainly query with Arnald how his conscience allowed him to do so. But of course he was only pretending to do so after all.
I may disagree with much of what you write on this site, but you research things intensively before you state your views. I suspect you would feel badly let down by knowing that Arnald’s “inside views of Guernsey’s finance industry” are in fact nothing of the sort.
Rupert
And I repeat: Arnald may or may not be who he claims to be – and it does not influence what I think
Candidly, any more than that what you say influences me as I have no idea you are who you claim to be either
That’s the trouble with secrecy: you can’t trust anyone
See why I oppose its pernicious effect?
Richard
Richard
The question isn’t “who” Arnald is, but “what” he is and more importantly what he falsely claims to be, with devious intent.
Yes, remaining anonymous enables people to hide behind their comments, including me. Some of us do so for perfectly good and practical reasons and could probably not contribute if our identities had to be disclosed. But you can bet your bottom dollar that most anonymous contributors don’t deviously make up false allegations about what they might be “witnessing” in their jobs to suit their personal views.
Rupert
Candidly I think hat to make accusations whilst hiding behind anonymity when promoting the virtues of secrecy is rank hypocrisy on your part and nothing you can say will change that
Richard
Richard
Not accusations on my part, but fact. Nothing either of us says will change the other’s opinion on the right to secrecy but that’s life.
Eh? Sorry for all the fuss.
“Rupert”, I am not an idiot. I know Guernsey and I know damn well you know my name, ask the right people and you can probably find out my shopping preferences and my medical history, so obviously any links between Arnald and reality should always be taken with a pinch of salt. It was a crap post by me, frustrated with the general vitriol and bizarre perception about how the public sector and the various subsets of the poor are being practically blamed for the recession etc etc suddenly the finance industry is boring again and the focus can be diverted to the wrong places, so I’ve only got myself to blame for copying the vibe of insulting nonsense. Still, proves my suspicions. And yes, my boss is top class.
I have never, on any blog, held myself up as a ‘whistleblower’. I have worked for 12 long, long years in all manner of finance industry jobs. I have never claimed to have witnessed any malfeasance, nor been in a situation where I had any suspicion of the required triggers for reporting. Done the training, done the hours, ate the flapjack.
So what? My general question, which you confuse with an attack, is on the lines of if industry standard AML training admits to there being the potential for difficulties in investigating through the trail of some structures, and that we specialise in complexities, then why is it that you (as in industry propaganda at local level) can so hand-on-heart honestly say that there is no abuse of any of the deliberately obtuse stuff that the people of Guernsey have apparently given the politicians a mandate to sanction laws supporting it?
If there is no abuse, do I have to take your word for it or can you provide me with all the evidence I need?
As a Guernsey voter I am concerned that I am being made complicit in the unprovable actions of an opaque industry that has disproportionate and unaccountable influence on Guernsey policy.
Is that alright with you, can I go now?
Arnald
It was indeed a “crap post” but you have been honest enough to admit that. I’m sure that we’ve all regretted pressing the “send” or “submit” button after a rush of hot blood, but yours seemed particularly vitriolic that I couldn’t let it go, particularly when knowing where you currently work, as nothing stacked up at all.
I didn’t say that you claimed to be a “whistleblower”. I deliberately used the term “quasi-whistleblower” to cover the situation where you, as a “compliance officer” claimed to be seeing situations every day which concerned you, which of course wasn’t the case as you don’t currently work in compliance. Its quite possible that you didn’t make such claims on this particular site, but on the This is Guernsey blog instead. But the link is obviously there and again I couldn’t let it pass.
In answer to your question, is it impossible for me or anybody else to say hand on heart that there is no abuse going on. What I can say hand on heart, and I’m sure that you know this, is that all regulated businesses in Guernsey have made massive progress in ensuring that their business is a heck of a lot cleaner than it was 10 years ago. Nobody can give you that “evidence”, because of its veyr nature, but its totally ludicrous for anybody to conclude that just because there is no evidence that everything is clean, that it must still be dirty. That’s a crazy argument albeit a clever one, because you know that you can never be proved wrong. But if its you that’s making the allegation then the onus is on you to prove your case rather than the other way round, and you can’t do that either. Nobody can win this argument so its a futile one, but you know as well as anybody that the offshore finance industry in Guernsey and other well-regulated jurisdictions is completely different these days from the industry which existed 10-15 years ago.
As a Guernsey voter you have the same vote as everybody else to change things. You can even stand yourself for election. The fact is though that you are almost a lone voice in the views that you promote. If there are 100 or even 200 people (out of what, 45,000 eligible voters) who share your views to the same extremes, then that gives you an idea of the scale of the challenge in front of you.
All I would ask is that you don’t claim to be working within the offshore finance industry in Guernsey when you are not. That is deliberately misleading to anyone reading your views of what actually goes on as those views are based on fiction and perhaps wishful thinking, not fact. Of course, you can actually say whatever you like, but you must at the same time accept the risk of being accountable for those comments, and not just to your real employer. As you rightly say, your boss is indeed “top class”.