The UK Tax Agreement – an explanation of where we are and how we got here
The announcement that the UK has reached information exchange agreements with all Overseas Territories and Crown Dependencies came after a turbulent few days. The UK has announced that they are pushing for all jurisdictions to have a registry of beneficial ownership. We already have one, and I think it is more robust than the registry planned for the UK. I want to explain why.13 April 2016
You’d be forgiven for thinking that the order of events has gone something like this since Sunday 3 April:
- revelations from 11.5 million leaked Mossack Fonseca documents link ‘a web of offshore centres’ to tax evasion and money laundering involving celebrities and politicians
- amid the sensationalist headlines and general hysteria, people try to point out the difference between tax evasion and tax avoidance, and the ethics of legal tax avoidance become debated
- the debate moves towards how greater transparency would stop ‘bad’ tax avoidance (the intimation being that any tax avoidance using offshore centres is bad)
- David Cameron announces that the UK Government has made the Crown Dependencies and Overseas Territories agree to measures that will stop ‘bad’ tax avoidance
But is that the truth? While the pressures of the last week have certainly pushed the authorities towards making an announcement, it is not as clear-cut as all that.
Yes, an agreement has been reached between the UK and Jersey regarding the exchange of beneficial ownership information with law enforcement and tax authorities but this is something that has been in the pipeline for years.
We have been collecting and exchanging information on beneficial ownership since 1989. Jersey has simply agreed to a quicker turnaround on requests from the UK law enforcement and tax authorities. Urgent cases will be dealt with in one hour, while routine requests will take 24 hours.
In 2013 we supported the UK's drive to enhance international transparency, and have been working closely with them since then. Jersey's Chief Minister has reiterated our continued co-operation with the UK Government on tax transparency. Although pressures in the last week have increased the speed of the process, this agreement is part of ongoing work.
Jersey can approach this latest commitment with confidence given the capabilities of our Company Registry, which is a well-established and robust depository for beneficial ownership information, and which provides a solid foundation for us to meet this latest step forward in the UK-driven transparency agenda.
It is, of course, essential that other jurisdictions within the constitutional influence of the UK Government are held properly accountable for their own delivery and operation of this new standard. Any failure to do so risks opening up another fault line against all Crown Dependencies and Overseas Territories, and I would encourage anyone with multi-jurisdictional presence to influence accordingly.
During his announcement, the Prime Minister said that the subject of public registries would be discussed at the anti-corruption summit planned for May.
As recently as this lunchtime, at Prime Minister’s Question Time, the issue of whether Jersey’s (and all Crown Dependencies and Offshore Territories) registry should be made public to all was raised in the House of Commons.
My view continues to be that we have a more robust system in place for the collection of accurate information on the beneficial owner of every company in Jersey than the UK’s planned public registry.
I wonder how the UK’s public registry can be considered a better model than Jersey’s central registry. Given that UK companies will be required to submit their own information on beneficial ownership, I wonder what checks and balances will be in place to ensure that the information provided is correct.
Jersey’s model of regulated, professional intermediaries effectively collecting and reporting this information, and the robust supervision of the Jersey Financial Services Commission, provides a more effective way of achieving the ultimate objective of ensuring that our jurisdiction is not used for corruption.
This is clearly an on-going issue, so expect further updates.
These links will give you further information on our agreement: