I will write about Jersey's new report on its finance industry one more time today. It says the source of its funds and where they are invested is as follows:
Let's be clear: any total for the UK sourced funds must include the £150 billion of funds from non-doms, who are people who only escape UK tax because of our racist tax law that allows some people to escape tax in the UK by accident of their birth and who only place funds in Jersey to blatantly get round settling the taxes due in the UK. So much for Jersey's claim that it does not help tax avoidance!
Then note that when all UK source funds are added together - and the precise stats are not published with this chart and so far Jersey are not sending me the full report - we come to at least 40% of all Jersey funds having UK tax resident origin. What's also obvious is that less than 50% of funds managed in Jersey are invested in the UK.
In other words, what is very obvious is that the vast majority of funds invested in the UK from Jersey did in fact come from the UK in the first place and only went to Jersey to avoid or evade tax (I stress, both). There can be no other explanation. Nothing else would justify the costs incurred in using Jersey.
Then let's note that the net funds actually invested in the UK from sources other than the UK are in net terms small in comparison - somewhat less than 10% of the overall funds Jersey claims to hold. And in that case let's draw the obvious conclusion: what this data shows is that we're looking at nothing more than a classic round tripping operation where funds leave the UK for Jersey only to return almost immediately to the UK with Jersey's role being to strip tax out of the return on these funds that are really earned in the UK.
How much tax? Well, let's accept Jersey's claim that the total funds they have under management amount to £1.2 trillion in all and that 40% or so come from UK tax residents as noted above. That gives £480 billion of funds stripped from the UK for tax abuse purposes. And let's assume a rate of return of just 3% on those funds and that an ultimate UK higher rate tax paying beneficial owner of these funds will pay 40% on that return in the UK at present (Jersey denies companies pay tax so I'll deal only with beneficial owners here). That's a loss of £576 million a year to the UK in tax paid.
Now note I'm being very generous with my assumed rate of return here and also note two further things. The first is I assume there has been no tax evasion on the capital invested, which is very generous and highly unlikely to be true. Secondly, I am aware that there is an argument that the tax lost may be paid one day, but that is irrelevant. First it is not paid now, and the UK tax gap is having real social implications at this point in time and not at some time in the future so that tax lost now has consequences now which cannot be relieved by saying the tax is deferred and second we have no idea how long that deferral will be for so the appropriate discount rate for any tax to be paid would be very high - meaning for all practical purposes even economically speaking the tax revenue is lost. However, for the sake of argument let me round down the tax lost to £500 million, which is likely to be far too low.
Then let's put this in context. The bedroom tax is designed to save the UK £465 million a year.
So Jersey costs the UK more than the bedroom tax saves.
660,000 people will be impacted by the bedroom tax in the UK.
This is what Jersey costs the UK each year.
It does not create the 112,000 it claims that its investment creates in the UK: the vast majority of the money that supports those jobs was already in the UK in the first place so this claim by Jersey is totally spurious. But the tax lost is not a work of fiction: the precise amount can be argued about but in the current year (which is what matters) I suggest I am likely to have ultimately underestimated it.
And in that far from Jersey being a benefit to the UK it imposes real cost on it - a real cost that is seen in the suffering of hundreds of thousands of people in this country because that loss is resulting in a policy that will make them homeless, deny them enough food to eat and result in countless families being broken up.
That's what tax havens do.
That's why I expose what I consider to be their lies.
And that's why I will continue to oppose the sordid trade they and those in the financial services industry who work in them pursue.
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The full report is available on the Jersey Finance website.
The report also ackowledges that Jersey may be responsible for up to £600 million tax leakage from the UK.
Interestingly I posted this fact on the Jersey Evening Post comments forum but the moderator chose not to allow it through!
I also posted that Deputy Taider had been proven right, again not allowed through the moderation.
And lastly, I posted that you had been far more accurate in your predictions about our economy than the local experts. In particular the size of the zero ten black hole and that the original proposal would not receive EU approval. Funnily enough that comment wasn;t allowed through either.
Which says it all!
I don’t think you can really assume that all the funds received from the UK are invested back into the UK, or that consequently almost nothing invested from elsewhere into Jersey is ultimately invested in the UK.
I would suggest that a wealthy individual putting money in Jersey is likely to have a diversified portfolio. That diversification would involve investing on a global rather than parochial basis. As a UK resident they may well want to have more exposure to UK investments because of the desire to have a portfolio that has sterling as the underlying currency, but markets and bonds outside the UK would be a major feature. I would typically expect a highly diversified portfolio denominated in sterling to have around 43% in UK based assets.
I think it is more likely that pie chart (b) represents the typical distribution of an average investor in Jersey regardless of where they live.
We both have a hypothesis, but ultimately neither of us will ever know who is right.
I can net the two off quite fairly, and have
Jersey cannot also claim funds would not go to London without them. That is absurd. May offset is reasonable
RM
I live in Jersey and work in financial services. Sir, it seems to me that your problems ultimately lie at home with tax legislation that facilitates tax avoidance. Evasion will happen, unfortunately, regardless of any laws. It is apparent that if you spent all of your time targeting your own politicians, you might have some luck getting the tax avoidance loopholes closed.
What gets my back up is why you target Jersey so prominently in your broadcasts? I get the message, and I agree there’s a problem out there, but why target our entire finance industry (island more like) when only a small proportion are the bad apples? The real issues here lie with home jurisdiction legislation, which if amended, has the potential to cease all tax avoidance. Though the knock on effect here would be a serious downturn in foreign investment as capital is repatriated ‘home’ since all advantages are lost. The finance industry here employs 12,500 residents, and supports their families. In total, the number of people dependant upon its jobs could be anywhere in the region of 30,000-50,000 adults and children, most of these British Citizens (my wife, I, and our two kids you can include here). I work in compliance, and the industry has changed a lot since the suitcase days. Compliance exists now for example and our regulator expects firms to invest heavily in their compliance programs. I ask you only to choose your words more precisely and direct your statements to those idiots running the bad apple trust companies, of which there are becoming fewer and fewer..
The funny thing is, even if you succeeded and sealed the UK tax-avoidance loopholes, many of the wealthy could decide to leave for pastures new, where they will get more favourable financial treatment.
Respectfully all if this has been heard before
And no one, from the G8 leaders, the OECD or in civil society now believes you
You ave lost this argument and I suggest for good reason
As for suggesting I pick on Jersey – far from it. You published a nonsense report today but oddly Guernsey, the Isle of Man, Cayman and Bermuda have all said the same
Perhaps you are all paranoid? Might you explain why?
Richard
What do you think went on behind closed doors immediately prior to G8? My view is that Cameron told the British offshore territory leaders that they had little to worry about as there is no appetite from most of the G8 countries to themselves comply, but at least Cameron can say that he tried. They will not be required to implement standards which the G8 won’t meet.
The IMF does not agree with you.
I’m with “Senior Finance Worker” on this. Your beliefs are long out of date.
I am sure many are with senior worker
The trouble for you is you have lost the argument at the G8, G20, OECD and IMF
Change will happen
In what way have we “lost the argument with the IMF”? Have you not read their reports?
Yes
And against a very limited criteria you are acceptable
But what is now clear is the criteria used is wrong – and missing the point
You can check a bad system works well and it still remains a bad system – which is what the IMF is doing
“I can net the two off quite fairly, and have” – making an assumption like this without any kind of supporting evidence just doesn’t make sense. Any paper that did the
Jersey cannot also claim funds would not go to London without them. That is absurd. May offset is reasonable
No it is not absurd
Funds only leave the UK for jersey for tax abuse
They only flow to London from jersey because of tax and regulatory abuse
The in and out flows have the same cause
So I can net them
Of course you can argue they are different funds but that’s not the point. Without tax and regulatory abuse there would only be the net overall foreign inflow – and that’s what I am saying, I thin wholly fairly
Whilst you ‘ave heard it all before’, so have we Richard, and we’ve tired of you slating us ordinary people and the industry most of us work in to very hard to excellent standards. Standards that the IMF have more than acknowledged Sir.
Do you really believe the UK would be better off if it closed its doors? I mean, that’s the only way to solve your problem. You are just like a politician, same old shit over and over again, yet when challenged at all you deflect and digress to avoid facing up to some facts, the UK’s tax issues are not entirely down to the dependancies.
Do you think that every homeowner in the UK who transfers their home into a company to avoid inheritance tax are evil Brits like us islanders? They might even use a Jersey company to knock capital gains on the head, lol…
I want to laugh at you but the damage you cause is not a laughing matter, and I would wish you nothing but your comeuppance. Time to accept that times are not changing anymore sir, they’ve already changed. Jersey is miles ahead of the UK and Europe in terms of financial services legislation and regulation. Beneficial ownership must be disclosed to the Registrar on incorporations – does anywhere else do this? And you can shout the trusts’ scenario all you want (I’ve heard it all before), but the bottom line is that trusts were born in the UK and remain in existence and very legal in the UK to this day… Should Jersey blame the UK on putting 800 people out of work when LVCR was revoked overnight? Which I might add, did nothing (and I mean nothing) to improve conditions on the high street. These items are still purchased abroad only now the jobs are in Switzerland or somewhere else outside of the VAT zone. The UK dicks its own Citizens… We have the same problems, caused by the UK, perhaps just on a smaller scale…
The fact is your abuse costs the UK £600 million a year and the claim to deliver jobs is bogus since it only counts capital inflows and ignores the near matching outflow
You also ignore the corrosive impact on democracy and society of what you do
Which is why the world ignores you
And listens to me
And which part(s) of my original post does no one else believe? I meant to ask you that first off…. It’s important you try to answer this question, because I have been nothing but factual in what I stated on your web-site. These are facts Sir, and you would do well with considering your actions have consequences that affect tens of thousands of people.
Facts do not tell whole stories
For example, everything Jersey does on its trust with reservation of benefits may be legal in Jersey – which does not stop the whole structure being an absurd of the concept of a trust.
You play by the rules but what the world now realises is that the law was created with corrupt intent
Sorry Richard I just couldn’t resist this 🙂
Two ‘soundbites’ from your last two posts:
“The fact is your abuse costs the UK £600 million a year”
“Facts do not tell whole stories”
Which is why I wrote the ret of the points noted
In other words, that fact had further implications that I explored and I was internally consistent in my argument
hmmm, well, no you were not consistent. All of your little headline ‘facts’ lack substance. £600m, boo hop. HMRC netted £2.5b… You cherry pick your facts to suit your agenda.
I doubt the world listens to you. On the face of it, you’d have had greater success in your quest to rid the world of tax avoidance and evasion.
And you’re not exactly a tax saint yourself eh, weren’t HMRC after you for that tax you avoided or evaded paying??
You appear to have now let reason and fact behind and moved to a realm of fantasy and foundationless slur
But that’s what I would expect from Jersey
Please do not call again – you will be deleted