The developments referred to by the Standard newspaper and the Financial Times overnight were a result of a leak of Jersey data in 2012 which was covered in the media extensively at the time and was subsequently investigated by HMRC. It is a matter for HMRC whether they prosecute individuals.
The two year old leak has been raised again, in my view, because of the fierce political infighting that is underway at Westminster where the main political parties are trying to score points by associating the other with tax evasion and aggressive tax avoidance.
It should be noted that tax evasion is a criminal offence in Jersey and has been since 1999. The Island authorities have indicated on many occasions that they neither desire nor engage in schemes designed to help companies or individuals evade UK tax, a position wholeheartedly supported by the industry in Jersey. Furthermore if any legal schemes designed to minimise tax are challenged by HMRC and deemed to be illegal, the Jersey authorities will not house them.
Aside from all the recent political rhetoric and the national media frenzy, which is primarily politically motivated and has been both unhelpful and misleading, the wider issue of transparency in financial services is an important development and this is something Jersey fully supports, providing it is done through the adoption of practical and workable global standards and a mature approach that balances the need for transparency with a legitimate right to an appropriate level of confidentiality.
There is inevitably going to be a small proportion of people who deliberately want to evade their taxes in any jurisdiction and what is important is ensuring that the tax authorities have the processes and mechanisms in place to deal with it. Most countries and Jersey is one of them has entered into automatic exchange of information agreements under the OECD common reporting standard so all the authorities will have details of their citizens’ holdings in other countries going forward. As far is the UK is concerned, they already have this process in place in respect of bank accounts with other locations, including Jersey, through the EU Savings Directive.
Furthermore, Jersey’s government recently outlined a package of measures designed to reinforce the message that Jersey does not welcome abusive tax planning structures. Under the measures, financial service providers in Jersey are expected to ensure that they identify if any new business they take on will facilitate the use of a scheme registered under the UK’s Disclosure of Tax Avoidance Scheme (DOTAS). These proactive, forward thinking measures by Jersey’s government in respect of abusive tax schemes, which involve working more closely with HMRC, have been welcomed by the industry also.
We would add however that Jersey is also supportive of fair tax competition and legitimate tax planning which is an entirely appropriate – and often the only – response to operating cross border in order to comply with the conflicting provisions, definitions and exemptions of multiple jurisdictions’ tax laws.