This Is Guernsey

By Tom Edwards

THE Association of Investment Companies has written to the UK Treasury Select Committee in support of the Channel Islands’ position as a financial centre and home to a growing number of investment companies.

The AIC is keen to ensure that MPs understand the legitimate role that ‘going offshore’ can play. It comes in the light of the International Monetary Fund last week announcing that jurisdictions should no longer be referred to as onshore or offshore, just good or bad.

AIC director-general Daniel Godfrey said the impact of such centres on the UK’s tax take was high profile at the moment and it was understandable that MPs wanted to look into it.  ‘However, the issues are diverse and complex. Unfortunately, debates on this agenda all too often start with a presumption that ‘going offshore’ is inherently undesirable.

‘In fact, that is not the case.  Using domiciles such as the Channel Islands can secure significant consumer benefits as it allows our members to offer investment strategies that cannot be competitively delivered by a UK-based investment company.’

The fact that the UK tax regime had not kept up with the evolving needs of the sector had allowed places like the Channel Islands to offer attractive and competitive alternatives, said Mr Godfrey.

‘A virtuous cycle has been created as the market has become established, standards have improved and investor confidence has grown.

‘We want to show the committee that our members are offering high-quality investment opportunities which meet the legitimate demands of all types of investor – from pension funds to the man in the street.’

The AIC wrote in response to the committee’s request for evidence  to support a forthcoming inquiry into offshore financial centres and their implications for UK tax policy.

‘Not all offshore centres or the activities carried out offshore are the same. But the last thing we want to see is misgivings about poor practice in one location distorting views and leading to all being tarred with the same brush when, in reality, territories such as the Channel Islands offer extremely high standards,’ said Mr Godfrey.

‘The policy debate must be carried out in an informed and measured way and we hope our contribution will assist that.

‘Hopefully, helping MPs understand the benefits which can be delivered by locating offshore will help us achieve our overall goal of protecting the reputation of our members, ensuring that there is proper understanding of the high standards they apply offshore and guarding against unhelpful policy interventions by the UK Government.’

Article posted on 23rd July, 2008 - 2.30pm