Jersey is at the heart of the latest tax avoidance scandals in the UK, almost univitably. Of course they just shrug it off and say it's all the UK's problem.
But is it? As one commentator, called David (who is from Jersey) has asked on the blog this morning:
I would like to see what the Jersey goverment would do if the top 20 employers over here set up K2 type schemes in the Cayman Islands so there staff could reduce their income tax and social security payments.
Would Geoff Cook, Senator Gorst et al, keep schtum and shrug their shoulders like they have this week?
Or would the find it morally repugnant and a threat to the islands finances and legislate or take action against it?
In my mind they would have no option but to take action, our deficit is big enough as it is so they could not afford to ignore it and lose the income. Which just about sums up my view of these schemes, if you’re not happy for it to be done to you how can you condone or promote doing it to others, it stinks.
He's right, of course.
But remember too that Jersey has, rather perversely, one of the toughest anti-avoidance laws in the country. Their s134a is, if anything too draconian for my taste, giving too much power to the States, but it looks likely that it works.
Ignore the Jersey angle. Just answer the one simple question.
Was this approved by HMRC and if so, why?
That is the bit I struggle to get my head around.
HMRC say not, it seems
The response would be very simple, I fear:
“Keep schtum, and double GST again”
Aggressive tax schemes only work because there is a vehicle, like a Jersey company, somewhere in the device. For the Treasury Minister of Jersey to deny any responsibility and say that it is not the island’s problem ignores the central role that offshore plays. It may all be devised in London, with London clients and London legal teams, yet implementation through Jersey or similar has to occur.
Will the government of Jersey or its Financial Services Commission be stopping the creation and sale of such aggressive tax schemes? Will we ever be told the name of the firm that markets K2, or the many others that offer similar products. No, of course not. The Chief Minister of Jersey is currently somewhere in the world with a marketing team for Jersey Finance.
The dogs may bark, but the caravan rolls on.
Richard, I think this has to be one of your most illogical posts.
Firstly, it is wrong to say “Of course they just shrug it off and say it’s all the UK’s problem”. The Chief Minsters has publicly stated that he considers this to be wrong and not the business Jersey wants to be doing.
Secondly, the point you raise “what would Jersey do if its best earners were using a scheme in the Caymans” only serves to highlight the point that in actual fact IT IS for the UK to sort out. I note there was no mention of what you would expect Cayman to do in the hypothetical scenario.
To summarise, you are absolutely right that if Jersey was losing out to a scheme run elsewhere it would be for Jersey to take steps, just like it is for the UK to take steps re K2.
UK govt. is a complete shambles anyway, the whole thing is hypocritical – Cameron on the one hand proclaiming Jimmy C to be immoral and these schemes outrageous and on the other inviting French tax evaders to London.
Cheers
Actually, that;’s exactly not what the Chief Minister has said – politely “he couldn’t give a damn” is a fair interpretation of what he said