CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. Channel Islands Respond To UK Tax Avoidance Debate

Channel Islands Respond To UK Tax Avoidance Debate

by Amanda Banks,, London

26 June 2012

The Channel Islands have responded to media coverage in the United Kingdom in relation to the use of offshore tax planning structures by wealthy individuals to mitigate UK tax liability.

The governments' responses comes after criticism of the tax affairs of a UK-based comedian, which had been structured under a 'K2' scheme in Jersey, to mitigate tax. The structure establishes an employer-employee relationship between the individual and a Jersey-based company. Employment income is distributed to the individual in the form of a loan.

In response to criticism of such arrangements in general, the UK tax authority, HM Revenue and Customs (HMRC) has committed to examine schemes such as K2, and other tax avoidance arrangements. Earlier this month, HMRC announced a formal consultation on the introduction of a new General Anti-Abuse Rule (GAAR), which will look to tackle 'artificial and abusive tax avoidance schemes'. If introduced, the GAAR would apply to the main direct taxes - Income Tax, Corporation Tax, Capital Gains Tax and Petroleum Revenue Tax - and National Insurance, as well as Stamp Duty Land Tax, and some taxes linked to Corporation Tax and Inheritance Tax.

In response to the media coverage, and on the proposed introduction of a GAAR in the UK, Geoff Cook, the Chief Executive Officer of Jersey Finance, the promotional agency for the island's financial services industry, stated:

"While we cannot comment on specific schemes, which are a matter for HMRC to consider and review, Jersey’s position on tax evasion is very clear; tax evasion is illegal in Jersey and it is criminal offence to facilitate or engage in tax evasion. Jersey is, and remains, one of the best regulated international finance centres in the world, a position that is regularly acknowledged by independent assessments from some of the world’s leading global bodies, including the Organization for Economic Cooperation and Development (OECD) and the International Monetary Fund (IMF)."

"In our view, conflation between illegal tax evasion and legal tax avoidance, or tax planning, is unhelpful in moving any wider debate forward."

Cook said that coverage of the matter, first published in the Times newspaper in the United Kingdom, "raised some important points in this area", and noted in particular that it had described the complex system of British tax reliefs as "byzantine", and called for "lower" and "simpler" taxes.

Expressing his hope that the GAAR consultation would be a positive development, in drawing a line in the sand on what constitutes acceptable tax planning, Cook stated: "It is this sort of informed debate and intelligent legislative development that can provide greater clarity and certainty for all parties and which we welcome as a positive way to develop the business of international finance.”

On behalf of Guernsey's Policy Council, the island's Chief Minister, Peter Harwood, said that Guernsey regularly discusses taxation issues with counterparts in the UK, the European Union, the United States, and supranational bodies such as the OECD, and would continue to do so.

He underscored that "Guernsey has the highest possible category (category A) of tax information exchange with HMRC; has implemented automatic tax information exchange with the UK and all other EU Member States that meets the standard of the EU Savings Directive; and late last year the G20's Financial Stability Board confirmed that Guernsey was a jurisdiction that was 'already demonstrating sufficiently strong adherence to regulatory and supervisory standards on cooperation and information exchange.'"

TAGS: individuals | compliance | tax | investment | tax compliance | tax avoidance | entertainers | international financial centres (IFC) | Guernsey | Jersey | United Kingdom | tax authority | offshore | tax planning | HM Revenue and Customs (HMRC) | HM Revenue and Customs (HMRC) | individual income tax

To see today's news, click here.


Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »

Stay Updated

Please enter your email address to join the mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.

To manage your mailing list preferences, please click here »