The excuses are already flying in jersey about the filming of Lloyds openly facilitating tax evasion by creating structures that avoided the European Union Savings Tax Directive and then stating they were indifferent to whether tax was paid by their customers.
Some say the salesman in question was just a ‘bad apple’; an isolated example.
Others argue it is only banks who have this problem; the rest of the sector is clean.
Others still are saying it is good for Jersey; this is what they’re for.
All are wrong. First, this did not happen by accident. Two interviews and two banks offering open assistance to evade tax — with explanations given on how to do so in both cases — is not chance. This stuff was not created one off for camera: this was secret interviewing, done twice with both Lloyds and Northern Rock showing that they know they provide mechanisms that permit tax evasion.
This suggests just one thing: that this is the normal pattern of events. These are learned sales scripts. The ‘turning of a blind eye’ is what they do — although illegal under anti-money laundering rules in Jersey. The selling of the fund by promoting its link with Hong Kong is commonplace, and in the case of Northern Rock the accepting of deposits only from shell companies is official policy. The turning of a blind eye in both cases again appears illegal tom me under Jersey anti-money laundering rules. This is, therefore, systemic abuse requiring systemic action to correct what is happening. That means no scapegoat can be created, senior manages and group directors are responsible. And it is they who should be prosecuted.
Second, banks of this sort are low grade activity. If they offer abuse then in more complex environments the abuse is simply more sophisticated. To argue that in higher grade activities the abuse is not present is to argue contrary to all we know about the way tax works: as complexity rises abuse does with it. I accept, the abuse may look more like avoidance and not evasion in these higher grade cases, but let’s also be clear, tax avoidance is also completely unacceptable and abusive.
Third, anyone who thinks that this is good for Jersey is deluded. If, as must be the case or this could not have happened, the culture of abuse is all pervasive and the appearance of regulation is, as I call it ‘constructive non-compliance’ then Panorama has done a considerable service in proving by just how far current regulation fails to deliver real change. the result will be more and better regulation requiring real change. And most places like Jersey will not survive that change simply because they cannot be regulated from within, which is the current assumption.
I have long argued this: in a tiny and deeply connected community like Jersey the outsider feels their status very badly. Regulators must be outsiders. Regulators of the only industry of note in a tiny place, where that industry holds the power of cash, and is corrupted by that cash — as Panorama showed - can hold any regulator to ransom by simply blocking them out of society, blocking their children and partners out of society and by ensuring that their lives are misery if they do their jobs properly. Few can face that sanction, which can be avoided in larger and more balanced societies. This is why Jersey will never regulate itself. And when regulation involved secret filming — as it should — then abuse of the sort Panorama has noted would be apparent.
That’s when the game will be up.
I expect this will happen sooner than anyone is predicting because change in this area is happening at enormous pace. And like it or not, spending cuts in the UK and elsewhere will not happen — they are almost impossible to deliver. That’s the lesson of history and nothing has changed. In which case tax rises will happen. And they’ll only be acceptable when the cheats are driven not just out of town but out of secrecy jurisdictions.
All of which will have to occur very, very soon.
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Slightly risky isn’t it accusing Lloyds of tax evasion Richard? 🙄
Seems to me that this whole thing has being blown out of proportion, partly due to the one sided panorama investigation.
Clearly, the product in question, designed to save investors tax, amounts to legal avoidance. Also, it is not for a bank to ensure its customers declare their income to the tax man. That can only be the customer’s concern.
If anyone should be blamed for the UK having such a massive budget deficit, its our government. Harping on about tax havens is merely a distraction – especially as all governments are well aware of the benefits they offer to the global economy.
I agree 100%, the hype before the programme was stoked up by the TJN people because of their hatred of Jersey in the first place. Just a dumb employee who was duped by a reporter. This will always happen everywhere, and it is not the first and will not be the last. Just be realistic for a change Richard.
John
I’m not accusing Lloyds of evading
I am accusing them of assisting those who want to evade. There is no other explanation for their actions. The European Union Savings Tax Directive was designed solely to stop tax evasion. Helping people get round it must be helping tax evaders.
I am also accusing them of not complying with Jersey AML rules because they turn a blind eye to potential evasion by those who either abuse or opt out of the European Union Savings Tax Directive. I think they have a duty to report each and every person who refuses to information exchange under the European Union Savings Tax Directive as a potential tax evader under anti-money laundering rules.
They can come back to me if they wish.
Richard
Matt
Interesting allegation
We did not put out anything in advance – and were caught by surprise by the BBC doing so
I agree we have some influence, but not that much
And I’ve read the entire transcripts – this guy was not duped
Richard
@Matt
You’re the ultimate troll. Just a “dumb duped employee” using the bank’s sophisticated structure established purely to avoid the EUSD. 😯
Using your inane logic, next you’ll be saying Nazi camp kommandants were duped and just obeying orders.
Matt, ilk like those you support have their days numbered for assisting tax evasion. Hope y’all have other life skills useful in a redundant tax haven viz. fishing, gardening and fish & chip frying for tourists.