WITH something like seven years’ work and a minimum of £200m. lost in uncollected tax on what now turns out to be an abortive attempt to adopt a zero-10 tax regime, the question now is, what next?

If there is a positive to be found in the wreckage, it is that from a tax take perspective, Guernsey will actually be better off than expected. All businesses here will have to pay something – possibly 10% – on their profits and that will significantly ease the budget deficit and thus the burden on islanders to fill the black hole from their own pockets.

The downside, however, is that no one can say with certainty how many businesses will be left to pay corporation tax and which ones will be affected.

The other effect is that any growth that the island had hoped for will be reduced as anyone thinking of using the island will pause or go elsewhere until whatever is to replace zero-10 has not only been negotiated but, this time, actually approved.

When will that happen? A transition period of perhaps three to five years is likely to be offered to move from one system to another but Guernsey will want to move as quickly as possible to end the uncertainty and to bring in the higher rate of business tax.

But even if this is rushed through and the UK and EU bureaucrats endorse new legislation, the earliest it can be in place is 1 January 2011, to coincide with the start of the tax year.

In addition, Guernsey will want to try to negotiate opt-outs to ensure that, say, funds registered here are not subject to tax on profit but are chargeable at the point and in the country the investor withdraws any proceeds.

In addition, the three Crown Dependencies will be anxious to ensure that other low-tax territories have similarly level playing fields.

Realistically, whether all that can be completed and implemented before 2012 – in just two years – remains to be seen.

However, there is one firm conclusion from all this: zero-10 was ultimately too provocative a strategy and islanders are now about to pay the price.