Umm, Richard?

Are you absolutely certain you\’ve got this right?

Oh dear, who are you kidding Mr Ozouf?

Jersey Finance say that in December 2010 there was over £366 billion held in Jersey of which more than £160 billion was in cash and at least £30 billion of that was for EU depositors.

Let’s apply a rate of 2.5% to this cash (which is low for the balances in question) and generate a return of £750 million. Tax was withheld at 27.5% on average during the year. So tax withholding applied to £14.5 million of the interest paid and the rest avoided the tax charge.

So, applying tax to less than 2% of deposits counts as full cooperation does it Mr Ozouf? And opposing all measures that might extend the scope – or even opting for full information exchange like the Isle of Man and Guernsey also counts as full cooperation does it?

Please pull the other one. No one believes you, and the evidence as to why is clear for all to see. We can all see why you think this process is working well – because it’s very obvious it’s hardly really working at all whilst giving you an essential fig leaf of respectability.

And then you wonder why people are sickened at the continuing abuse you promote. Well, you shouldn’t be: the world can spot a sham when it sees one and your press release and all that lies behind it is just that.

So, if you\’re an EU resident with a bank account in Jersey you\’ve got two things you can do.

1) Say you don\’t want them to tell your tax residency about the interest you\’re earning. In which case they scrape off that special rate that Ritchie is talking about.

2) Say, yes, please do tell my place of tax residency about the interest I\’m earning. So you can pay me the interest whole and I\’ll obviously have to declare it on my tax return: because you\’ve already told them about it.

Now as far as I\’m aware, there aren\’t any other options. Not as an individual: my Jersey account certainly doesn\’t allow any other options.

So, what Ritchie is pointing at is that almost everyone is having their interest income declared to their place of tax residency. That is, that almost everyone isn\’t avoiding tax by having a bank account in Jersey.

However, he\’s taking this evidence of very little to none tax evasion as evidence of large amounts of tax evasion.

Why?

18 thoughts on “Umm, Richard?”

  1. You can tell this loophole is closed because you no longer get calls and letters from your UK bank inviting you to seminars at swanky hotels on how to take full advantage of their channel island branches services. Or is that just because I moved all my cash out of the UK?

    To be fair, the UK banks were for years pretty cyincally promoting tax evasion opportunities to Brits resident in other EU countries. They knew they couldn’t get away with it for UK residents, but for those overseas, for whom failing to declare a non-domestic account is a rarely-punished oversight, they knew their UK-based regulator wouldn’t care about that. All changed now, of course, but some people haven’t caught up.

  2. I was at a meeting a couple of years ago where a Guernsey official was giving a presentation on the EU Savings Tax Directive. From memory, over 75% of EU citizens holding bank balances had requested the information to be provided to their countries tax inspectors (or similar). Available statistics also detail that 43% of suspicious activity reports (to the authorities) allege possible tax evasion. So not only are the majority of EU citizens exchanging information, those that are not are having tax deducted and those banks etc that have suspicions over the accounts maintained are reporting them too!

  3. Andrew Montgomery

    in most cases, the tax you should pay depends on where you reside….so if you move every 3-6 months – like a lot of contractors in the IT and oil industries – and never become resident anywhere for tax purposes, you will not pay tax anywhere. Which is why withholding tax exists, even in Jersey.

    The question of where you deposit your legally earned cash is up to you. You can bank it in places such as the UK, which is increasingly governed by legislative whim (or idiots like Cable), or you can bank it in places such as Switzerland and Jersey where the owners of the money are given some rights over their earnings.

  4. Andrew Montgomery – partly what diogenes said, but also a lot of Jersey money belongs to UK non-doms.

    Non-doms living in the UK aren’t taxable on their non-UK income, provided it stays outside the UK.

    So they opt for disclosure, tell the UK Revenue about it, but it isn’t taxable so that’s not a huge problem.

    But if they kept their money in the UK, the interest would be taxable, so they don’t. So Jersey makes sense, even with full disclosure.

    I suspect a big proportion of that £30m EU money in Jersey is from UK non-doms.

  5. And of course Murphy’s got it completely the wrong way round.

    If there is any dodgy money in Jersey (and I’m not saying there is), it’ll be part of the “less than 2%” that opts to suffer the withholding tax rather than have it disclosed. Not the 98%+ that opts for disclosure.

    But of course that wouldn’t be much of a story for him.

  6. At what point does Murphy become so risible in his incompetence that even the people he is enabling start to back away in alarm? I don’t think two days in a row go past without him coming out with a nugget of such utter, copper-bottomed, ocean-going fuckwittery that my jaw does not slam open in disbelief at a fairly healthy fraction of the speed of light. Still he persists. There’s of course creeps like Arnald who’d queue for six hours in a monsoon to give him a flabby, slack-jawed, drooling, cup-the-balls blow-job but his ponces at the TUC surely have some sort of fiduciary responsibility, don’t they?

  7. David Gillies, I sometimes wonder whether he’s actually a plant, thought up & paid by whichever big accounting firm he briefly worked for, to discredit the opposition.

    But then I read some of his dafter pieces and decide that no-one would dare take parody that far.

  8. David Gillies, Murphy is a con man. He is very good at it. He works the long con and the short con. He is paid fabulous sums for his nonsense. I hope he laughs himself senseless with every cheque coming in.

    His victims are lefties in general and unions in particular, and that fact gives me great satisfaction.

  9. A Jersey bank account is handy for British expats because it is in many ways treated like a UK bank account, e.g. transfers from Jersey to the UK are treated as domestic, hence not subject to some honking great charge each time.

  10. @Tim Newman,

    But such an account no longer helps British expats any more than having a mainland UK bank account since you are liable for the same taxation on both. Sure, if you are UK non-dom and keeping money offshore it is still useful, but nowhere else in the world (well, almost nowhere) actually has this dom/non-dom system. If you live somewhere, you pay tax on your worldwide income there – including income in tax havens. The UK simply operates a weird exception.

    I agree you can become non tax-resident anywhere (I managed it myself one year and I’m a bloke in very ordinary circumstances ), but here you can still get around the withholding tax by having the information sent to the taxman in one of your three or more countries that you spend the least amount of time in. If you aren’t liable for taxation there, they will then proceed to do nothing with the information. I doubt any of this information is actively followed up on anyway – most places probably still trust you to be honest on your return, and use the fact of information transfer to encourage honesty, rather than checking every last eurocent.

  11. Information transfer also assumes you’ve been honest with your bank about your location of tax residency.

    Say you were to keep a bank account in the UK but maintain a UK address, and the bank believed you lived there. If you actually lived in, say, Portugal, they wouldn’t be telling the Portuguese taxman about your interest.

  12. Corporate structures are, by and large, not subject to EU SD across all EU jurisdictions. (Despite Murph’s insistence that this should be otherwise). Ergo, most cash would appear to held in corporate structures, hence no reporting or witholding requirement.

    I don’t understand what he seems to be criticising, other than appearing to assert that Jersey is breaking the law by not fulfilling their reporting or witholding requirements. But I guess as long as the EU and OECD continue to disagree with him on this, I guess his best bet is to continue tilting at windmills.

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