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Monday, 23 July 2012

"Taxing Times Ahead"

Crackdown on tax avoidance


The UK government is launching a fresh crackdown on tax avoidance.

David Gauke M.P
It follows last month's news that the comedian Jimmy Carr was using a Jersey-based scheme to reduce his tax bill. After his tax affairs were made public, he apologised and quit the scheme.

The UK Treasury said such structures were in their sights and that clearer rules were needed.

Treasury minister David Gauke MP said: "If there's one lesson to be learned from the cases exposed in newspaper reports in recent weeks. If a tax advisor tells you something that sounds too good to be true, it probably is too good to be true, so one of the major parts of our consultation is how we can make people aware where a company has peddled schemes that have been successfully challeged so that they know there is a strong chance that no good will come of it."

You might imagine tax experts in the Channel Islands would be worried by all this attention, but they say they welcome it, pointing out tax affairs are rarely black and white.

John Shenton of accountants Grant Thornton said: "It does fall into shades of grey. I think some are more grey than others though and I think where you have a transaction which is clearly artificial, then I don't think in the current day and age then that's a place we want to be. I think if it's artificial then it does cross the line."

It all comes as a major study by the Tax Justice Network says £13,000,000,000,000 or 3,000 times the size of the economies of Jersey and Guernsey is hidden in tax havens by the world's richest people.

Their report gathered data from governments, the World Bank and International Monetary Fund. They say it highlights how the mega wealthy are using complicated methods to cut their tax bills.

And though that report doesn't specifically refer to Jersey or Guernsey, it does list a number of well-known banks and they will be familiar faces around the financial districts of the Channel Islands.

The question now is whether the latest crackdown will convince the world's super-rich and their accounts to think twice about tax avoidance.

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