Guernsey Keeps Focus On Tax Compliance Despite International Demands

by Jason Gorringe, Tax-News.com, London

24 January 2006

During 2004, Guernsey's Compliance & Investigation Unit of the Income Tax Office completed 146 enquiries which gave rise to additional tax and penalties of more than GBP2 million, for only the third occasion in any one year since 1988.

The Unit reported earlier this month that the completed enquiries yielded GBP2,385,603 during the year, equalling an average of GBP16,340 per case.

The unit also collected a little over GBP2 million (GBP2,000,315) from 171 enquiries during 2005, an average of GBP11,698 per case.

Commenting on the latest results, K.R.L. Forman, Administrator at the Income Tax Department, observed that:

"The results achieved by the Unit once again validate my ongoing commitment to investigate and deal with cases of tax evasion and avoidance. The Unit will continue to use the resources available to it to pursue those people who seek to reduce their tax bills to the cost of all other islanders.

"This is especially relevant as the island moves towards 2008, at which time Guernsey has committed to reform its system of corporate taxation, which will bring with it a potentially significant reduction in income tax receipts from companies (the much spoken about 'black hole'). At that time it will become even more important to the island that everyone pays the amount of tax to which they are liable and pays that tax promptly."

Several major developments in the international taxation sphere have occupied senior staff at the Guernsey Income Tax Department staff in the past year, not least the island’s adoption of measures equivalent to the EU Savings Directive.

The jurisdiction has also been negotiating Tax Information Exchange Agreements with a number of OECD countries, and in 2005 meetings were held with Australia, Germany, Iceland, Ireland, Italy, the Netherlands and New Zealand.

This program will continue in 2006, when it is likely that there will be discussions with even more OECD countries.

Praising the efforts of the tax department on the compliance front over the past twelve months, Deputy Lyndon Trott, Minister, Treasury & Resources Department observed that:

“For yet another year, the Compliance & Investigation Unit has recovered a substantial sum from tackling tax evasion and avoidance, notwithstanding the considerable demands being placed on the resources of the Administrator and his colleagues during 2005."

"The work of this Unit is vital to the financial well being of the island," he added.

Since the Unit was brought into existence, in mid-1988, the amount it has recovered now stands at GBP21,210,446 from 3,097 enquiries.

Recommended