Tax haven critic pours cold water on financial white list
Saturday 4th April 2009, 2:29PM BST.
IT IS too early start celebrating the future of Guernsey’s finance industry, according to tax haven critic Richard Murphy.
He has long campaigned over the status of the island and the need to abolish secretive jurisdictions.
Late on Thursday, following the G20 summit in London, the Organisation for Economic Cooperation and Development released a white list of cooperative jurisdictions that included Guernsey alongside the likes of the USA and the UK in a move that has been heralded in political and financial circles as the ending of the stigma of the island being a tax haven.
Mr Murphy vehemently disagreed and claimed to have seen a letter by Prime Minister Gordon Brown asking for the OECD to do more, although he would not supply a copy to the Guernsey Press.
‘I have the letter. He’s asking the OECD to take this process a lot further than the list you have avoided getting onto,’ said Mr Murphy. ‘He’s asking to take this a lot further and extend it to tax avoidance. You might celebrate and think that’s it, but no, it isn’t. This is the start. Gordon Brown said this is the beginning of the end, not the end of the end.’
Currently, the criterion for approval set by the OECD is for a jurisdiction to sign off 12 tax information exchange agreements.
Leaders at the G20 told the OECD to publish its list, but Mr Murphy said it had not set that number in stone and by November it might be 24.
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While everyone is gloating thinking that ‘this is the end of harrasment’ for the Islands, it’s interesting to hear Richard Murphy’s point of view. I agree with him.
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Steve
Ignore Murphy. Tax avoidance is legal and the courts over the last hundred years have consistently reinforced that message. That’s not going to change. It is up to every country to introduce anti-avoidance legislation to close down any loopholes that they want to close. That has always been the case.
Murphy is an extreme socialist whose personal wish is for tax avoidance to be deemed to be tax abuse, and to be deemed a crime. It cannot happen until there is global tax harmonisation (which will never happen) or while the EU gives the right for residents of its member states to freely transact in other EU member states (which may have lower tax rates and thus in Murphy’s eyes would become illegal).
It is absolutely right that tax evasion is being clamped down on, as it is and always has been a crime (except in Switzerland !). But tax avoidance is legal and is a different kettle of fish altogether.
Some of Murphy’s argument are very weak. He uses the tactic of being able to say whatever he likes, knowing that the nature of the offshore finance world means that it is very hard to disprove his allegations. He runs away from battles whenever anyone stands up to him (I know – he has banned me from his blog for daring to stand up to him on arguments that he cannot win !).
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From reading his points in Saturday’s Press, I think Richard Murphy is pretty much clueless about the whole situation, and seems to just be a bitter critic of low tax jurisdictions. His claims re the letter from Gordon Brown and the fact that he won’t allow anyone to see it to verify his claims make him sound rather fake and foolish.
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Greg
Why do you say that. He doesn’t criticise the level of tax set by any democratic jurisdiction. He despises the secrecy and the fact that secrecy attracts tax abuse. He was at the G20 summit. Were you?
A pertinent line from David
“He uses the tactic of being able to say whatever he likes, knowing that the nature of the offshore finance world means that it is very hard to disprove his allegations.”
Why would he be making allegations then?
What apologists are saying is that the likes of Barclays making a mockery out of the UK tax system should continue because someone deemed it legal before these structures were ever invented.
And we are still promoting SPVs despite the mess that the tax payers are forking out for the word over. There is an intellect disconnect going on here. Vested interests no doubt.
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Maybe someone can refute this analysis on TIEAs without sounding desperate?
http://www.taxjustice.net/cms/upload/pdf/TJN_0903_Exchange_of_Info_Briefing_draft.pdf
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Arnald/Fast Robert
Murphy makes those allegations because he detests offshore finance centres, with a particular hatred of Jersey thanks to his mate Christensen, and is determined to see us all closed down. He refers to practices which were typical of a bygone age, at least 20 years ago, as if they are widely practised today, and is simply out of touch with the high standards which are practised by the vast majority in the Channel Islands today. Now, there is no issue at all with trying to drive out the remaining cowboys, but we all know that those are a tiny minority, rather than the norm.
One only has to read Murphy’s extreme socialist views (similar to your own) to know about his ulterior motives. He is a Chartered Accountant who refuses to engage in lawful tax planning to reduce his clients’ tax bills. So in whose best interests is he acting ? Not his clients’, that’s for sure.
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Although I don’t believe that there will not be further attempts in the future to make life difficult for us and I think Steve P is right, I think Richard Murphy’s credibility is shot, for years he has been telling anyone who will listen, that these jurisdictions should be closed down as they were corrupt money laundering regimes that robbed the UK exchequer of millions. His hatred for Jersey in particular is well known and that hatred prevents him from recognising that much of his assumptions about these islands is just plain wrong. We have been investigated by almost every organisation on the planet from the IMF, OECD the EU and HM treasury and we have proved beyond doubt that is simply not the case, contrary to Murphy’s ranting’s we have proved to be a well regulated low tax finance centre. When we talk to people in the OECD and our advisers in Westminster, in fact the people who really matter on the global stage TJN who RM is attached to have no credibility whatsoever and zero influence on what takes place between these islands and the international finance ministers or their officials of the OECD countries, who the Chief Minister and our Treasury Minister deal with on these matters.
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Richard Murphy’s personal hate campaign against the Channel Islands was (and still is) based on half truths and misinformation. He consistently plucks ridiculous figures out of the air and promotes the as if they are fact These distortions are often picked up by the media and get propogated as if they are facts. I am glad that the OECD and the G20 were able to take a more rational view.
That said, it is true that we have many battles still to fight, the biggest of which, I think, is going to be a massive increase in bureaucracy imposed by external jurisdictions under the guise of “improved regulation”.
Ironic really that the regualtory framework we have adopted in Guernsey is, in my opinion, far more effective and less cumbersome than those of our onshore neighbours. They might do well to look to our system for advice on how to run their financial services industries rather than the other way round.
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Despite my criticism of Murphy, I would not say that he has no credibility. He has played a significant role in addressing illegal tax evasion and should be applauded for that. Driving out criminal money is something that nobody can or should criticise.
But Murphy then lets his social beliefs take over and tries to persuade governments to deem lawful tax avoidance as unlawful by attempting to eliminate the offshore tools which play a lawful role in tax avoidance. Of course he is entitled to his opinions and I respect that, but what I don’t respect is his abuse of lies and propaganda to achieve that. That’s when he goes over the white line in my view.
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Arnald
The TIEAs are what they are. They were designed by the OECD and requested by G20 countries and others. If they don’t do the trick then of course they can be revisited if there is enough demand from the countries concerned to do so although I suspect that such demand does not exist.
However, its clear to me that the relaxation of bank secrecy laws and the proposed extension of the EUSTD will go a long away towards making the TIEAs more effective, provided of course that non-EU countries such as Singapore, Switzerland, Hong Kong and Dubai actually sign up to the EUSTD (and why would they ?).
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CD makes the point “Richard Murphy’s personal hate campaign against the Channel Islands was (and still is) based on half truths and misinformation”
Seems to me that both sides are into the half truth and misinformation game.
Whilst tax avoidance is legal it needs remembering that some tax avoidance vehicles seen by their creators as avoidance are questionable as to their legality.
The criticism of TIEA’s is not just from Richard Murphy. There are a number of others, see the weekend heavy weight papers; who see them as of limited effect. Others such as Private Eye have been critical of TIEA’s for some time. Time will tell of their worth.
Another aspect is the limited range of TIEA’s across the total tax avoidance spectrum. Some see trusts, usage of offshore domains for intellectual property purposes, etc etc as the greater picture.
Perhaps the crux of the matter is in David’s critique of Richard Murphy “But Murphy then lets his social beliefs take over and tries to persuade governments to deem lawful tax avoidance as unlawful by attempting to eliminate the offshore tools which play a lawful role in tax avoidance.
Why shouldn’t social beliefs inform legal beliefs?
Perhaps Guernsey should understand that whilst it regards accommodating tax avoidance as being fair, those who have to pay increased taxes to subsidise the Guernsey finance industry, its employees and taxpayers, through the extra business and employment tax avoidance provides.
What was acceptable in yesterday’s economic circumstances (tax avoidance) might not be so socially nor legally acceptable in today’s economic climate.
I feel that the comment of Deputy Dave Jones that “Although I don’t believe that there will not be further attempts in the future to make life difficult for us” will prove true, not necessarily relating to TIEA’s but to tax avoidance in the wider sense, something that the Guernsey representaives seem to be ignoring.
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Socialist I am beginning to think is a synonym of Hypocrite. Brown has deepened the rich poor gap in the UK dramatically and wants to do the same here by denying us a valuable source of income.
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David is, I think, spot on here.
Until every country in the world has the same tax laws/rates, we all use the same currency, we all speak the same language etc etc there will never be any parity. This won’t happen – therefore there will always be disparity.
And people like Mr Murphy will nver be happy.
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Many fine postings (yes it’s true, I am not being sarcastic),
However no one, but no one mentions a word, small in comparison with some words, but with an awful lot of meaning and honesty, that word is
Morality, Is it morally right to allow others to carry the burden, because they are honest in their ways, and therefor pay their taxes whatever the cost. The biggest offenders are of course those who by law allow it to happen.
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As usual Stephen John makes some valid and well thought out points.
I realise that I am never going to persuade someone who believes in the redistribution of wealth through taxation that the services we provide are morally acceptable.
However, I do keep coming back to the fundamental point that we are NOT actually ripping-off tax revenues from other countries.
I realise that this statement runs contrary to every argument that has been pitched against us by the likes of Richard Murphy in recent weeks but I believe it to be true and here is why:
Firstly, we are not knowingly involved in any business activities that result in tax evasion (i.e. the non payment of taxes legally due in another jurisdiction). Richard Murphy argues vehemently that this is not the case but he is wrong – tax evasion is illegal, we in Guernsey don’t do it – end of story.
Secondly, we have, in my opinion, one of the best regulatory frameworks in the world in terms of mitigating the risk of involvement in money laundering, financing of terrorism or any other criminal activities.
Thirdly and perhaps most relevantly to the point I am trying to make – any individual, company, bank or other entity doing business in Guernsey does so because they have no legal (and I would say moral) reason to base their business in an onshore jurisdiction. This is still a free world, if you want to start a business you can do so anywhere in the world provided you do so legally. You could, for example, set up a business selling widgets in France, or in America or in Azerbaijan or all 3 of those places.
If you based that business in France would you be doing Azerbaijan out of its taxes? No of course not – where you base the business depends entirely on what is the best thing to do to ensure you make a profit. (ooh I said the “p” word sorry).
In some (but not all) cases it makes commercial sense to establish the new business somewhere like Guernsey which has a low tax regime. This, obviously, gives a financial advantage compared to, say, France where I hear they intend to introduce a 97% widget tax.
Basing your business in Guernsey does not mean that you are depriving France of its 97% widget tax. Remember, you have the freedom to set up your business anywhere you like in the world (there is absolutely no legal, commercial (or indeed or ethical) imperative to make you set up your business in France or any of those other countries). If you set up the business in Guernsey you are paying low rates of tax because you are a Guernsey business, not because you are stealing tax revenues from those other countries.
I would not expect anyone with left-leaning political tendencies to appreciate or approve of this unfettered example of free market economics (especially after recent global events), however I maintain that the underlying assumption that we are somehow depriving other countries of their rightful taxes is simply wrong.
The money that passes through Guernsey (and it often does pass through) invariably gets invested in stock markets, banks and businesses around the world. It indirectly leads to jobs for millions of people – who of course pay their personal taxes. Where a Guernsey entity has – say – UK investments, it will pay UK income tax on those earnings. Where a Guernsey entity invests in – say – a manufacturing business in Germany it will pay German taxes, German rents, German social security charges, it will buy German products and generally contribute to that economy.
And another thing – there is an argument that low tax jurisdictions add an element of “tax competition” to the global economy. Because of us countries need to control their spending and make their economies competitive and attractive – it could be argued that we keep some of their worst excesses under control.
Richard Murphy in common with many of Guernsey’s critics bang on about “tax havens” without even a basic understanding of what it is we actually do here. I have no problem with anyone objecting to what we do on the grounds that this is free market capitalism and not everyone agrees with that – but I do object to people like Murphy putting themselves forward as self-appointed pundits and then selling endless lies and half truths to the media.
(Forgive me for repeating myself on some of these points – this is absolutely the last time I bore everyone with this subject I promise).
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Excellent post CD. You know your onions.
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Stephen John provides a superb perspective on this debate, and again comes across as the voice of reason. Given what is at stake, the State reps would do well to take his message on board.
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CD – a clear, rational and well thought out post. And absolutely right, as well.
Stephen John – you are right that the perceived morality of the business world may be changing. Guernsey (including its finance industry) has shown itself to be adaptable and willing to evolve with changing markets over the years and this is no different. If some of the more elaborate schemes become seen as “bad” (even though they are within the rules as of today) then they will be abandoned. We will adapt and find new, good business. So long as the absolute right of this jurisdiction to set its taxes at the level it chooses remains (which it surely will) then there will always be business to be done – legitimately in both the legal and the moral sense.
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CD
CD
¬¬There is no problem with companies that set up and operate in Guernsey. The problems arise when companies with no physical operating function in an offshore domain deliberately set up companies in an offshore domain, to reduce tax payable in the country where the physical business was / is.
The same applies to using offshore centres to register patents etc where the purpose is to reduce tax payable where the profit is earned.
There are numerous examples some involving Guernsey where private companies who now own UK Government properties such as the Home Office use offshore companies to ease their tax burden.
I accept that many will see such behaviour as acceptable. I was interested in the comment in the Times about the recent survey on MP expenses. “Working-class voters and Tory supporters are most inclined to say that most MPs abuse the system. Professionals and managers are most sympathetic to MPs over their allowances”
Does this feeling also apply to offshore taxes?
The Times comment suggests that the view on the morality of tax havens might not be leftist. I have never voted for any party other than Conservative, yet have real concerns about tax avoidance in its more esoteric fashions, where financial vehicles of increasing legal question, masquerade as legal avoidance, until they are banned.
Basing a physical business offshore is perfectly acceptable. Placing profit earned elsewhere offshore to reduce tax payments is to some still acceptable; but I suggest more and more are seeing such behaviour as increasingly unacceptable.
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Stephen John – a lot of the business that is done here involves businesses that have no physical presence anywhere other than board meetings: investments in other businesses and the such like. If a group of investors from various parts of Europe wish to get together to make investments, where should they base their investment vehicle? If they chose the UK are the French and German investors avoiding tax in their home jurisdications? No, as it cannot be based in every jurisdiction for which there is an investor. So there is nothing wrong with choosing Guernsey, with its low rate of tax, so that the investment vehicle makes maximum profits which will then be taxed by the investors’ home nations when they get their profits.
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Part of the deception by people like Murphy is to accuse the offshore dependencies of bringing the financial world to its knees. We are either hiding tax which is due to other countries or laundering all kinds of illegal funds which is one of several common accusations, or that we are somehow undermining their tax laws by charging lower tax rates. Quite where these countries believe they have acquired the right to collect taxes outside their own boarders is a mystery to many of us.
This is what Dan Mitchell says from the Centre of Freedom & Prosperity: So-called tax havens did not set out to “undermine” the laws of other nations. Indeed, most offshore centres have always had low taxation and privacy protections. What’s changed is that politicians in “onshore” nations have become progressively more greedy, and this is what is causing an exodus of jobs and capital.
High tax regimes should not be able to shield themselves behind repressive iron tax curtains, in order to hide from globalization and legitimate competition, while at the same time bringing in draconian laws to prevent their populations the right to invest their money where they choose. The ability of any self governing jurisdictions to determine their own tax policies is their right and a fundamental part of any democracy and the idea that the high-tax nations have some sort of divine right to export their tax laws to every other nation has to be resisted at every attempt. We have to counter Murphy and his cohorts who are now trying to convince the rest of the world to force their protectionist tax policies on all the low-tax jurisdictions, while at the same time trying to eradicate banking confidentiality. Several of our critics for years have hidden behind bland statements about money laundering or unfair tax practices, in order to excuse their thirst for prying into the lives of individual savers and investors, attempting to turn the low tax jurisdictions they accuse of harbouring these unfounded claims, into quasi tax collectors on their behalf.
In today’s global economy, governments face pressure to reduce tax rates in order to keep investment and entrepreneurial talent from moving to lower-tax environments.
This is what tax competition is all about and it is an important check on excessive government authority and control, both domestically and internationally. Any attempt to stifle tax competition by attacking low tax jurisdictions will set back beneficial tax reform for people already crippled under the yolk of excessive taxation for years, it is only the idea that people have choice that prevents profligate governments from raising taxes to even greater levels.
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TL
The exceptions you refer to are different from the one I mention.
The concern is about companies that trade in one place but move their profit offshore so that it attracts less tax.
i accept that some will see nothing wrong wiith this. Howwever, I feel these would be maily those who benefit from the offshore avoidance, something as you rightly say is currently legal.
Those who have to pay more in taxes to make up for the taxes saved by the use of tax havens will see things differently.
Time will tell whether Gordon Brown has he courage to properly deal withtax havens. Despite what he told Richard murphy I suspect Brown will not have the courage to upset corporations and those who help finance his political party.
In the short term this Uk political inertia is good for Guernsey, but what risks face the island five or ten years down the line?
Best strategy is to keep a low profile and resist bragging, something many will see as being translated as “We got away with it” For now!!!!
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Tax avoidance is never ripping off tax revenues from other countries seems to be the gist of CDs argument.
I’m not sure whether a well known UK Commercial/Investment bank used Guernsey ( I think it was mainly Cayman) for its manufactured tax writeoffs and double tax deductions on the same transaction (so called “double dipping”)via its structured finance unit. Clearly some tax authority is getting “ripped off” in that last example (maybe two) and some offshore jurisdictins are helping to facilitate it.
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Dave Jones quotes extremist Dan mitchell – “The ability of any self governing jurisdictions to determine their own tax policies is their right and a fundamental part of any democracy and the idea that the high-tax nations have some sort of divine right to export their tax laws to every other nation has to be resisted at every attempt……..
This is what tax competition is all about and it is an important check on excessive government authority and control, both domestically and internationally.”
Surely the two sides of this statement are contradictory. It’s not OK for ‘onshore’ jurisdictions to close down loopholes to ensure that tax is fairly paid by all, but it is alright for ‘low tax’ jurisdictions to interfere with higher tax jurisdictions in the name of competition?
Mitchell’s visions have failed. he believes in the similar doctrine to the system that has collapsed – in fact to an even more deregulated and rich-appeasing manner. Luckily his views are gaining less support from the mainstream as they used to, as normal, rational people can see that his ideas would push the poor even further into hopelessness and the rich would continue to become more and more isolated in luxury.
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Deputy Dave Jones says “Quite where these countries believe they have acquired the right to collect taxes outside their own boarders (sic) is a mystery to many of us”
As I recall Guernsey taxpayers pay tax on world wide earnings. Or perhaps this has changed?
However, its good to see that Vedrey Tora and Sarnia Liberty, the two tankers owned by Guernsey, are registered off shore – in Gibraltar!!!
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Stephen John
The points that you make re. the establishment of offshore trading companies is fairly valid, but you’re overlooking the reality that Guernsey really doesn’t do “offshore trading companies ” (i.e. re-invoicing”). Such business is actually very hard to justify when it comes to assessing its substance. What do the actualy directors offshore do ? As a result, I don’t think any (or at least many) fiduciary service providers will take on such business these days. The Guernsey fiduciary services industry is made up almost entirely of passive investment holding structures, which do not involve the kind of tax planning issues to which you refer.
It is also not viable for offshore companies to deprive onshore jurisdictions of tax on intellectual property. Why ? Its because in the absence of a double tax treaty, the payer of the royalty onshore for the sue of the IP has to deduct very high rates of withholding tax. So, if a Guernsey company owning IP rights licences it to a company in the US, then the US user has to deduct 30% withholding tax at source. The US is receiving absolutely everything to which it is entitled, indeed arguably more because if the IP rights were owned onshore, i.e. in the UK, then the double tax treaty between the US and the UK would reduce tghe withholding tax to either nil or a very low rate (I’m abroad at the moment and cannot check the exact rate). The ultimate ownership of the IP rights may well be held offshore so that the capital value is enhanced in a tax-efficient jurisdiction, but nobody is losing any royalty revenue.
Similarly, the UK property scenario to which you refer (Mapeley) results in the offshore company being subject to UK tax on itgs UK-source net rental income. Mapeley receives UK tax relief on its interest from borrowings to offset against the rental income, but if it was onshore in the UK then it would be entitled tgo exactly the same reliefs. I am assuming that in Mapeley’s case any capital gains from sales of its UK properties would not be subject to UK tax on an arising basis, but this is merely tax deferred, not tax avoided.
As a result of the above, what tax is being lost onshore with the above examples ?
Spartacus – if you are referring to the bank whose names begins with a “B”, it used Cayman, Luxembourg and, I believe, Jersey. Guernsey was not used.
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David
You refer to specific situations.
Taken Mapeley as an example, and I didn’t have Mapeley in mind, it’s then Chairman told the Commons Committee that investigated the sale, that the move offshore was to limit tax liability.
Whether through poor management it has faikled to make money is neither here nor there. The intent according to the head honcho was to save tax.
Equally one can show examples where intellectaul property is moved offshore to save tax, and or, as you say tax deferred.
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By the way, getting back to the title of this article, the OECD did not publish any black, grey or any other coloured lists.
They merely published progress reports. It was the G20 that spun the progress reports to trumpet their own (supposed) success.
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How many times has those two ships been used to bring fuel to Guernsey,
And at what cost has it been to harbour those ships at Gibralter?
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Eric
Neither ship has been to Gibraltar since the purchase was announced.
The Sarnia liberty (ex Vedrey Thor has been moored at Liverpool since the early hours of 20 January. Apart from a few days in the Baltic the ship has been moored.
The Other ship, the Vedrey Tora has been very active topping up Guernsey, Jersey and Isle of Man. It was in the islands this week and has recently arrived at Milford haven.
So, Eric, one ship is working but mainly for others. The other is doing sweet nothing.
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Stephen
Are you now saying that even tax deferral is morally wrong?
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David
No, I am not saying tax deferral is morally wrong.
What I was saying is that I agreed with you that moving some of intellectual property offshore could be for tax avoidance or tax deferral purposes.
However, when I reflect on a comment by a learned QC last year that “It is more usual to divide tax avoidance into aggressive and non aggressive tax planning behaviour” I can well understand any confusion.
Actually David, I thought you saw tax deferral as legally questionable.. In your March 2 posting to Daniel you said “.But why would you (or indeed anybody else ?) have opted for withholding tax unless you were not intending to pay your full taxes in your country of residence ?”
However, to be fair, during the heady days of the Editors Blog, the same behaviour you had previously defended as tax planning (deferral)
What chance do we all have if even the experts get confused?
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Stephen
Now I am really confused !
I understand your first comment, and I agree with the observation of the QC that tax avoidance is increasingly being categorised into “aggressive” and “unaggressive” and, by extension, “unacceptable” and “acceptable”.
Its your last point which confuses me. Tax deferral is most definitely acceptable and I would never have said otherwise (believe me !) so I think you have misunderstood. What I said to Daniel was that if somebody was intending to pay their full taxes in their country of residence on their Guernsey bank interest, why would they opt to suffer withholding tax at source on the interest earned ? By opting to have their information automatically exchanged with the UK tax authorities the depositor will be compliant, but his actual liability to pay UK tax on the Guernsey bank interest being reported would not be until the following 31st January after the 5th April tax year during which the income was actually earned, thereby benefiting from the gross roll-up effect of the legitimate tax deferral, and being fully compliant throughout. Willingly accepting the 20% withholding tax at source halves the benefit of the tax deferral if the customer is intending to eventually declare the interest and pay the balance of the tax due, which is why it is not unreasonable to conclude that the majority of depositors who accept the 20% withholding tax probably have no intention of declaring the interest and paying the balance of tax due, which is of course tax evasion and a criminal offence. Hopefully that is now clearer !
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David
This is what you actually said.
“March 2, 2009 at 1:24 pm
Daniel
I am very aware of the provisions of the EUSTD.
The 20% withholding tax (previously 15%)is only applied in cases where the accountholder opts for withholding tax instead of exchange of information. Yes, Guernsey retains a percentage of the tax withheld. But why would you (or indeed anybody else ?) have opted for withholding tax unless you were not intending to pay your full taxes in your country of residence ? If you were willing to exchange information then you wouldn’t pay any Guernsey tax at all and your sole tax liability would be in your home country.
If you were opting for withholding tax then does that mean that you were illegally evading tax in your home country ? It rather suggests that you were. By the way, if that’s the case then you would have been committing a criminal act of tax evasion and so are on very dodgy ground indeed”
You can now see why I made my comment. Remember I also said that it was in contrast to your previous comment on witholding tax – that was similar to the explanation posted by you last evening.
Thanks for clarifying your views.
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Thank you Stephen John;
So we not only cater as an off shore tax-haven, but have also turned into a charity organisation for others; and this is the great and stupendous work of a man who thinks he knows it all.
Even Guy Fawkes did better.
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Stephen
Sorry but you have lost me completely.
In my original post to Daniel I was saying that opting to suffer withholding tax rather than exchange of information suggested a lack of intention to declare the interest earned to the home tax authority, which would be tax evasion and is illegal. I then explained that if the depositor opts for exchange if information, then they can benefit from the legimitate deferral of their liability to UK tax on the bank interest, as interest earned during one tax year (ending 5th April) is not taxable until after the following 31st January when their tax return for the previous tax year must be filed. That is totally legitimate tax deferral, but the opportunity to benefit from it is lost (by half) if the depositor has opted to suffer the 20% withholding tax as half of the tax liability will have already been suffered by the withholding tax. My point is that why would anybody voluntarily choose to suffer the withholding tax if they are intending to pay their full tax liability ? By doing so they are giving up half of the legitimate benefit to a UK resident of holding a Guernsey bank account.
Where is the confusion?
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