View the article online at http://citywire.co.uk/wealth-manager/article/a640042
Channel Islands surrender client confidentiality to UK 'son of Fatca'
by David Campbell on Dec 10, 2012 at 10:37
The UK is exploiting the widespread adoption of the US Foreign Account Tax Compliance Act (Fatca) rules on tax information sharing with plans to launch its own version, effectively ending client tax anonymity across UK dependencies.
In a joint statement issued last week, the chief ministers of Jersey and Guernsey confirmed the UK Treasury had begun negotiations to adopt similar principles to those enforced by the US.
‘This will require a major shake-up,’ said Richard Morton, banking and finance partner at law firm Squire Sanders, adding that it would affect the islands’ finance industry at all levels.
‘I can see why it would be attractive,’ said Andrew Watts, partner at tax investigations specialist Watt Busfield. ‘Why leave the field open for the Americans to take all the benefits?’
The UK has a very big stick: it can effectively veto the islands’ Fatca authorisation if they refuse to agree to a British version of the rules, making transactions with US counterparties near impossible.Exchange of information
‘The UK has approached the Crown Dependencies and the overseas territories with a view to the principles being applied to an exchange of information with the UK,’ said the minister’s statement. ‘The UK and the Crown Dependencies share a common commitment to combat tax evasion and to participate generally in international efforts to combat financial and other crime including fiscal crime.’
This comes as a surprise, given that at the end of November the UK denied it was seeking to impose information sharing on its dependencies, while Jersey was making noises about its notional sovereignty.
That both parties have now accepted the principle – in the case of the dependencies, giving up on a historic and much cherished privilege – demonstrates how far the debate on tax secrecy has changed.
‘The UK is exploiting this situation to shatter the secrecy of the Crown Dependencies,’ wrote chartered accountant and tax campaigner Richard Murphy, who has seen the draft documents.
‘In due course I expect it to do the same to the overseas territories. And then a major step forward in breaking tax haven secrecy will have been made.’
News sponsored by: