Bespoke – Grant Thornton

DEVIL’S ADVOCATE
NO PLACE TO HIDE
There is much talk of anew global era of transparency in
banking, but does it really amount to anything? And what,
if any, are the consequences for individuals in the UK?
ILLUSTRATION PETER JAMES FIELD
he April 2009 meeting of the
developed nations (the G20
summit) looked in advance as
though it was going to produce
little but hot air. Inthe end the various parties
involved managed to find anumber of subjects
on which they could all agree, including amove
against so-called ‘tax havens’. The G20 final
statement noted that it would ‘take action against
non-cooperative jurisdictions, including tax
havens. We stand ready to deploy sanctions to
protect our public finances and financial systems.
The era of banking secrecy is over’.
So what does this mean for high net worth
individuals in the UK with offshore accounts? For
many the answer is ‘not much’; they will already
be disclosing all that they are required to under UK
law. However, for those who have enjoyed banking
privacy, the rules of engagement are changing.
The first step is working out what qualifies
as a‘tax haven’. There is no formal definition.
The Organisation for Economic Co-operation and
Development (OECD) believes atax haven will
have no or low taxation, protection of financial
information (secrecy) and alack of transparency or
exchange of information with other jurisdictions.
Pressure from the OECD has led to a‘white list’ of
40 countries which have substantially implemented
its tax standard of information exchange and
transparency. There are two ‘grey lists’ of countries
which have committed to the standard but have not
yet substantially implemented it. There are, then,
four countries on the blacklist: Costa Rica,
Malaysia, Philippines and Uruguay, although all
four are now stating that they want to take steps
to take themselves on to the ‘grey list’.
The G20 summit has tasked the OECD with
pushing hard on the issue of tax havens and to
report back in November 2009 at ameeting of the
G20 finance ministers. Whether this will result in
any concrete proposals remains to be seen. But
what does appear to be happening is that effective
PAUL ROBERTS
Partner,Head of Tax
Investigations,
Grant Thornton
behind-the-scenes negotiation is bringing country
after country in line with the OECD standard.
Closer to home, the last few months have seen a
number of jurisdictions entering into negotiations
to increase the transfer of tax information.
Liechtenstein has begun discussions with the UK
with aview to anew agreement that will include
the ability to access information about UK residents
that have invested money in Liechtenstein without
declaring the resultant income to the UK authorities.
Switzerland has announced it will no longer use
banking secrecy as areason not to disclose
information to foreign jurisdictions about persons
who deposit money in Switzerland.
Arange of countries such as Jersey have entered
into TaxInformation Exchange Agreements (TIEA)
with the UK. The global financial crisis has meant
that no one wants to be left as the ‘bad boy’ of
the tax world.
For those in the UK there will be aNew
Disclosure Opportunity in the autumn. This will
be another chance for those who have offshore
accounts whichshouldhavebeendisclosed on UK
tax returns to come forward and face acapped
penalty, the details of which are still to be
announced. Anyone concerned about these issues
should contact their Grant Thornton representative.
The global financial crisis has meant
that no onewants to be left as
the ‘bad boy’ of the tax world
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