From Barrie Stevens.
BY nationalising some banks the UK has effectively moved the constitutional goalposts so that its fiscal and political influence now reaches into the heart of those offshore jurisdictions of the Isle of Man, Jersey and Guernsey.

The so-called ‘nationalised banks’ have subsidiaries offshore which, while not subject to the same political penetration as their parents without, one presumes, States or Tynwald legislation, will nevertheless surely come under some form of UK influence via government placemen on the board.

This in turn may affect the UK’s attitude towards the jurisdictions hosting these banks operating in what is still a tax-sensitive area. Likewise, who knows what information may now fall within the realms of HM Revenue and Customs over and above existing information exchange requirements?

This is the same HMRC that admitted to paying £100,000 for client account information stolen from a Liechtenstein bank account. With the UK taxpayer being burdened by many billions of national debt up to a third of annual GDP in the wake of bank nationalisation, of which more could yet be necessary, it may well be that no stone will remain unturned in the search for delinquent tax revenues.

This more so, as it is arguably intolerable for the Crown Dependencies to benefit indirectly while in the eyes of many seemingly living off the fat of the tax ‘avoision’ land by perception if not necessarily in fact. Pressure placed on the UK by other cash-strapped jurisdictions is also a potential factor.

The fact that the three Crown Dependencies were not fiscally part of the UK and internally autonomous in such matters was the key factor underpinning their finance sectors.

The UK could not directly interfere without consent save in extremis and by convention did not do so. Banking operations, most of them, were local incorporations and stood apart from UK jurisdiction, as shown in the recent Icelandic subsidiary bank failures in the Isle of Man and Guernsey.

Recent unavoidable circumstances seem to have forced a questionable constitutional sea-change. What other tax advantageous areas see their fiscal heartland so suddenly and inextricably linked to the fiscal authority and indeed parliament of the competing if not hostile metropolitan power?

The Isle of Man’s situation is even more curious, as Royal Bank of Scotland plc has the Isle of Man Bank, which acts almost as the Island’s version of the Bank of England, appearing on many banknotes. The UK has now a majority control of RBS such that at one fell swoop the UK has by proxy potentially acquired a political sphere of interest within the Isle of Man government’s fiscal heart.

This state of affairs would until now have been impossible to achieve by conventional constitutional means within the aegis of the islands’ relationship with the UK. Subtle change has been wrought in terms of unlimited potential such that one wonders if the islands’ very status as Crown Dependencies has been changed for ever, thus casting a shadow over their finance sectors’ future purpose and direction.
4 Leigh Terrace,
Douglas,
Isle of Man.