A&F Probes Phantom Inland Revenue Crackdown

by Rosie Allsopp And James Falla, The Guernsey Press And Star

08 October 2003

This story is reproduced by kind permission of This Is Guernsey at http://www.thisisguernsey.com

The Advisory and Finance Committee is investigating reports of an Inland Revenue crackdown on offshore bank accounts and trusts.

The Sunday Times said that the Exchequer was set to receive a £1bn windfall following an investigation into suspected tax evasion within the high street banks in Guernsey, Jersey and the Isle of Man. It claimed that the Revenue was conducting its first coordinated attempt to end evasion by offshore trusts and accounts.

More than 20 banks and building societies were allegedly being investigated, though the Revenue declined to comment when contacted by the Sunday Times.

The committee said yesterday that it had heard nothing of a crackdown.

‘A and F has had no contact from the Inland Revenue on this matter,’ said a spokesman.

‘We are currently investigating the content of the article, which offers no substantiation of the allegations made. We have no further comment at the moment.’

It is understood that the article appeared only in early editions of the newspaper. It included allegations that banks were paying tax and penalties on behalf of their customers.

Robin Fuller, chairman of the Guernsey International Business Association, said: ‘This is a matter for the Inland Revenue and UK clearing banks. It’s nothing to do with Giba or Guernsey.’

Guernsey Financial Services Commission director-general Peter Neville declined to comment .

UK residents are personally responsible for declaring any interest received offshore.

Accountancy firm PricewaterhouseCoopers staged a seminar last week on increasing Revenue vigilance on offshore practices. Tony Mancini, of the firm’s tax department, said that there was limited recourse under UK law to get information from the islands.

But he said the Revenue could have the right to investigate parent companies.

‘They could attack from that aspect because they have the power over head office, but usually they can’t go to the Channel Island banks,’ he said.

Mr Mancini said there was no need for local banks to immediately surrender information.

‘Banks shouldn’t necessarily roll over. We’ve got to look at whether they have any power here. Sometimes they may have it right, but more often than not they are just throwing their weight around.’

Most reputable offshore organisations were unlikely to be involved in tax evasion, considering the need for a squeaky-clean reputation.

‘It’s not just clean now, it has to be seen to be clean.’

He suggested that some finance houses might offer to pay to avoid the spotlight.

‘Some banks may roll over before they get targeted but I’m not suggesting they are doing something wrong.’

He said that the areas allegedly being investigated probably dated back years.

‘Maybe people weren’t as thorough as they are now and I think that the Inland Revenue is looking at those cases.’

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