Why is Britain a haven for tax havens?
So MPs are finally beginning to dig around in what flowed from the banking system meltdown in the aftermath of the Lehman Brothers collapse.
Of intimate British interest is the Isle of Man’s involvement with the Icelandic bank Kaupthing. The Isle of Man used to be in the news for TT motor cycle racing. These days it’s money that does it.
Inevitably one is drawn to the weird status of this island in the Irish sea. It appears to be British, but not as British in governance terms as we are.
There have always been concerns about Britain’s offshore entities – the Channel Islands (Guernsey, Sark, and Jersey) in particular. They say everything’s above board. But the vast majority of people who bank there have nothing else to do with the place, and that’s bound to raise the possibility of misperformace.
It is strange that Britain seems to preside over more tax havens than any other country in the world. Not only these islands (whose uncertain status Chancellor Alastair Darling has ordered an inquiry into) but places like Gibraltar, the Cayman Islands, Turks and Caicos. And more.
Why? And wouldn’t you think that in a world beset by financial meltdown and the rest, beset by drug cartels from Afghanistan to Colombia, you would actually want to tighten up control of these things in a night?
No related posts.
There are 16 comments on this post
Good points Jon.
As someone who works in banking I’ve often wondered about the status accorded to offshore tax havens, sorry, ‘banking centres’. In today’s world they seem as much of an anachronism as the British peerage system. For example, if everything really is above board, why does one have to deposit a hefty minimum sum (usually around the £100k mark) in order to open an account offshore? The work required of the bank is roughly the same. The simple answer is of course that they’re tax dodges for the rich – a leftover but thriving part of the ‘old school tie’ culture where the well-off looked after their own.
In today’s world they really should be abolished but then we’d have to actually pay a price for being more ethical, as customers moved their money elsewhere. In light of what happened to New Labour’s ‘ethical foreign policy’ and commitment to the green agenda I won’t hold my breath. However, with the sky still falling on the banking sector after it’s nefarious dealings and taxpayer money bailing it out, perhaps it’s a price worth paying, now more than ever.
Do your homework before making such comments.My life savings with an Isle of Man bank are about a quarter of the amount mentioned in your comment and the interest is taxed under EU regulations.
No, they are not just ‘tax dodges for the rich’, No, you don’t have to deposit a minimum around £100k to open an offshore account, and No, we are not asking for the British taxpayer to ‘bail us out’. So go on, have a look at the real story at http://www.ksfiomdepositors.org/ and get your facts straight before you offer your uninformed opinion.
This is complete hogwash.
I saved with the Derbyshire Building Society as was.
It certainly didnt require a 100k deposit and nor do any other IOM banks.
How dare you be so biased and judgemental and worse blindingly wrong.
Well I understand that UK Anti Money Laundering legislation prevents UK banks from offering banking services to people without a UK address. Thus if you are working overseas, but want a bank account that these Offshore Accounts are offered as suitable.
I haven’t got a good explanation for why UK businessess have subsidiaries in these Offshore Centres. Well, okay.. I think its called “Tax Planning”. *cough*
dear sir
on your news 19:00 news program on tuesday 23rd you stated that Buddy Holly’s (learning the game) was a little heard of track. It is infact on the Coral lable side two track 3 of the Buddy Holly story volume 2 (Lva 9127) hope this puts the record straite,
yous sincerly J brownless
It would seem the whole financial system in this country is designed to ensure the rich get richer and the poor support them whe the going gets tough
The Guardian is running a chilling series of articles this week about how major companies, who enjoy all the perks of being in Britain, get around paying their fair share of tax.
Individuals do the same and the government does nothing. But if an ordinary person is a day late with his tax return or his payment – instant fine.
Why are politicians so spineless when it comes to getting the wealthy to pay a fair share?
Please, Jon (and anyone else) visit
http://www.ksfiomdepositors.org/
and ask: is your blog helpful to these people?…Increasingly desperate British nurses, teachers, soldiers..people doing their bit ‘for Britain’ in industry abroad, pensioners.. not allowed to bank on the mainland …they need support..and support includes fair representation..The ‘tax haven’ currently fashionable tag is cheap and no, it does not help.
I’m afraid I don’t understand your point cliffka.
If I work in the US, or Spain, or France, etc, I can set up an account with a local bank – I have no need of the overseas arm of a British bank. If I live in Guernsey, then if I desire I can open an account with Barclays in Guernsey.
The issue I raised refers to UK residents and businesses that choose to open an account on a small island thousands of miles away purely to take advantage of tax loopholes. Perhaps if these were abolished, the people you mention wouldn’t have been tempted by the lure of lucrative returns from an overseas account, and they’d have invested their money in a relatively far safer, UK account.
Everyone please look at & read stories at http://www.ksfiomdepositors.org/ maybe then you will begin to appreciate that these innocent depositors are not “tax evading fat cats” Read about the human suffering being caused to ordinary,decent working folk, mostly elderly/retired,some UK residents, IOM residents,others Expats. All worked and saved prudently throughout their lives, paid all due taxes and now find themselves homeless/destitute/frightened/suicidal.Shame on HMG, IOMG, FSA, FSC and Kaupthing,Iceland. Together you have destroyed thousands of lives and what little future is left for the old & infirm. Shame on Tony Brown, Chief Minister for IOM for not giving honest answers to fact finding questions at yesterday’s Treasury Select Committee in London. This opportunity to do the right thing was lost, how dare you claim to be doing the best for depositors, you and your government deserve all that I hope will eventually befall you. Your treatment of these innocent law abiding citizens including some of your own is despicable.
Distraught Grannie
Jon Snow you should be ashamed of yourself with this cheap piece of journalism. You know very well British people, without a UK address cannot open a bank account in UK. In answer to the comment made about banking in the country we are working in. Many of us felt safer banking as close to home as possible – hence Derbyshire Building Society IOM – a British bank !!!
Jon Snow you should be ashamed of yourself with this piece of cheap journalism. You know very well that British people working abroad cannot open a British bank account without an address in UK. In answer to the comment made about banking in the country where we are working – we wanted to bank as close to home as possible – hence The Derbyshire Building Society a British bank !!!
Any normal retail depositor on the Isle of Man (or any other channel island jurisdiction for that matter) is required by law (EUSD savings directive) to either declare their savings and personal details to their government, or pay 20% tax at source on any interest they receive from their savings.
The amount needed to open an account with Kaupthing bank was just £10K, so NO they are not accounts exclusively for the filthy rich, but for those who are slightly better informed than “Joe Public” and a little more prudent.
The British offshore jurisdictions are NOT tax havens – nothing could be further from the truth – people who believe that are either ill informed or completely ignorant.
Whilst some large corporations might be able to engineer complex bonds and wrapper products to hide their investments, ordinary retail depositors are just like those investing in UK banks and building societies. The only difference being that Isle of Man interest rates are slightly higher (and those British citizens not resident in the UK, had no other option for a bank account because without a UK address, they are prevented from opening an account on the mainland).
It really is time you brought yourselves up to date and realised that retail depositors affected by the Kaupthing collapse are completely innocent tax paying citizens and contribute millions each year to the UK Treasury coffers.
Colin Rimmer – Kaupthing Depositor
I agree with most of the comments here. Most of the people who have lost money are law abiding British citizens. We have lived overseas for many years and were saving for retirement. We opened our account with Derbyshire because it was British and we could not open a mainland account. We did not wish to risk our hard earned money. We now have absolutely nothing left – like most of those affected by this debacle. Why are the KSF IOM depositors the only ones suffering when all other governments have stepped in to solve the problems of their bank depositors. It’s shameful!
My grandparents lived in modest rented accommodation their entire lives. My grandfather served in two world wars. They deserved a lot and yet were always paid little. I wish they had the opportunity to invest thousands of pounds in offshore or overseas accounts. Maybe they wouldn’t have bleated about losing when their ‘sophisticated’ investments failed.
I think that most banks in the United Kingdom have stronger and restrictions over the taxes collected….