 Chas Roy-Chowdhury |
In the pre-Budget report (PBR) the chancellor made quite a low key comment.
"The government will shortly commission an independent review of British offshore financial centres," he said.
He also made it clear that the UK would not be held responsible for any sums held in the offshore bank accounts, in the same way as it is for the amounts held at UK on-shore bank accounts.
One wonders what is behind all this.
The review will not consider changes to the UK's constitutional relationship.
It will though look at the role of British offshore financial centres in the global economy, and in particular
- financial supervision and transparency
- fiscal arrangements
- financial crisis management and resolution arrangements
- and international cooperation.
What is the problem?
First off, what are these dependencies and territories?
 |  With the transparency will come a greater flow of information about all things to do with tax.  |
Well they clearly include the Channel Islands and the Isle of Man.
But what about the more exotic locations such as the British Virgin Islands, the Cayman Islands and Bermuda?
The governments of these three jurisdictions did not issue press releases supporting the review, unlike Jersey, Guernsey and the Isle of Man authorities who did.
But it certainly would not make any sense, if the UK government is trying to take stock of its obligations, for one or more of these offshore jurisdictions to end up in the lurch like Iceland.
Therefore, once the full scope of the review is announced, it will almost certainly seek to look at all the locations where, for whatever reason, the UK government might end up being pushed into guaranteeing the savings of UK citizens.
More than meets the eye
But I think there is also more to it than this. There are probably two other very clear cut agendas behind this exercise.
First, the government will wish to ensure that whatever new regulations emerge from the embers of the current crisis for banks and financial institutions, these offshore jurisdictions are fully signed up to it.
And it will also wish to ensure that the new framework has a great deal of transparency built in to it.
Most importantly, along with the transparency will come a greater flow of information about all things to do with tax.
The government must be keen, as a spin off from the banking crisis, to ensure that UK tax payers do not use off shore jurisdictions to evade paying UK tax.
While the review itself is not specifically about tax, but about government obligations, it will almost certainly seek to enforce tax compliance as an offshoot of the work.
More demands
In the brave new world after the banking crisis, much taxpayers' money will have gone to keeping banks afloat.
| We are about to enter interesting times in the offshore banking sector |
Governments in the UK, US, other parts of the EU - and many other countries around the world - will no longer tread softly when seeking information from the banks in offshore jurisdictions about its taxpaying, or perhaps insufficiently taxpaying, citizens.
I also think if those demands do not receive a swift response, then the UK and others will work much more in co-operation with one another to obtain what they are after.
I think in any case we are about to enter interesting times in the offshore banking sector where transparency is the name of the game.
But at the end of it all, the mainly Western governments who are seeking information from the off-shore centres may find that their taxpayers were actually being much more honest than they were giving them credit for.
The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.
source: bbc
link to the original post:
http://news.bbc.co.uk/2/hi/business/7748803.stm
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Rory Vanucchi
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