New law will produce ‘flood’ of work
Tuesday 16th June 2009, 3:00PM BST.
Robert Kirkby, technical director at Jersey Finance
JERSEY’S finance industry has a new international product to sell.
The Jersey Foundations Law was approved last week by the UK Privy Council and will come into force in the middle of July.
Specialists say it has the potential to bring in ‘a flood’ of work for the Island’s trust firms, legal firms and the Island’s company registry.
Foundations have long been used in other parts of the world – such as Panama, and Liechtenstein – but this is the first time that they have been available to Channel Islands practitioners.
The structure is expected to be used an alternative to trusts, particularly for people from parts of the world where the concept of trusts is not well-understood. Potential customers include families wanting to preserve their private wealth, successful entrepreneurs, and also charities.
Robert Kirkby, technical director at Jersey Finance, said: ‘The approval of foundations is a hugely important development for Jersey’s finance industry. There has been extensive consultation between industry, legislator and regulator throughout the development of the Jersey foundation.’
2012 CYCLE SLAM
Dallaglio Flintoff 2012 Cycle Slam
Read Graeme Le Saux's daily blogs
Greece-London Marathon on a Bike
The Dallaglio Flintoff 2012 Cycle Slam
Travel
To, from and around the Island
Airport Arrivals/Departures
Harbours Arrivals/Departures
Bus Information/Timetables
This is Jersey
Jersey Evening Post
Useful links
Preserving private wealth sound rather like tax avoidance to me. Foundations are used in countries well known to be tax havens.
Report abuse
It will be interesting to see what actually happens.
I am old and wise enough to remember the limited liability partnership law which was drafted at vast expense by commercial lawyers and caused a fair rumpus when it went through the States.
Predictions were confidently made of large accountantcy firms using it to limit their risks on multinational audits.
As far as I know only one or two small firms have ever used it and it was in terms of income for the island a bit of a waste of time and money.
Foundations could be a flyer, on the other hand they could be a bit of a flop.
But I suppose it is the job of the boys and girls at Jersey Finance to give them a fair wind
Report abuse
Finance, finance, finance, oh sorry I forgot for a minute that’s all that matters!!!!!
Report abuse
Mogit
There is of course far more to life than finance – health and happiness, the sound of wind in the trees, my daughters laughter.
In the meantime finance pays my bills…
Report abuse
Get ready for a massive influx of UK bank staff arriving to take the jobs. As we all know this is specialist work and locals are incapable of doing it.
Oddly they can’t be trained by the UK experts either, when their 5 year J cats are up they will be replaced by more UK workers.
Lets have a proper sucession policy in place whereby if UK workers are brought in they must train a replacement within 3 years and return back to the UK.
This in finance only of course as real J cat positions ( doctors, teachers etc ) are actually essentially employed and not a scam used by the banks.
Report abuse
Wow! Now, we can do the things they do in such transparent and open places such as Panama and Liechtenstein.
Jersey Finance must be so proud of finding another way of keeping vast quantities of money in the hands of the deserving few.
Isn’t it great to be part of this wonderful world?
So, when we’ve sorted out those irritating JDA Trotskyites and those deluded people who question their betters, we can all sleep safe in our million pound Trinity farmhouses.
Report abuse
what a lot of misconceptions you all have
Pip,
When the LLP law was going through, as a sop to Syvret a requirement for LLPa to put up a 5m bond was added to the law. As a result, Jersey has no LLPs at all.
The UK has passed an LLP law without the bond and has loads. It may be that if Syvret hadn’t thrown his toys out the pram we would have got that work. It may be that as a result, we would have higher reserves and maybe not have to impose GST. Just a thought.
The reason why Jersey has introduced foundations is precisely because they are mainly offered by Panama and Liechtenstein. There are lots of people who prefer foundations to trusts and don’t want to deal with dodgy jurisdictions. Jersey has grabbed the opportunity to offer foundations in a well regulated, white listed jurisdiction.
This is a simple, good news story for the Island.
Well done JFL!
Report abuse
Is this what the States mean by diversification? Stay in the same niche and just specialise into new products?
So its more of the same then.
Bring on the Monty Python Spam (finance) speech. You can have whatever you want as long as its finance.
If we have a new flood of this type of work all it will do is make the outside look in even more, in my opinion. Talk about making as big a target as possible.
Is it ok to affect other countries tax arrangements and hit their tax revenue? I am of the opinion that it is not. It is time everyone paid the same percentage in tax as the rest, in whichever country they reside in. This is fair and equitable as far as I am concerned.
Report abuse
Foundations, aren’t they a prime product of that wonderful jurisdiction Liechtenstein, known for its blatant tax evasion strategies as blown wide open by that recent whistle blower to the German tax authorities. Quality stuff. I wonder what the unintended consequences of this will be further down the line? Lets hope not as catastrophic to the world financial system as those wonderful securitisations we helped peddle. I think the higher eschelons (sic) of our finance industry have no shame.
Report abuse
Mad Foetus, if a multinational partnership like Price Waterhouse Coopers wanted to set up a LLP in Jersey a £5M pound bond would not bother them in the slightest.
One of the peculiar aspects of the supporters of the Jersey finance industry is that they alternately belittle and big up Stuart Syvret and the other dissidents, one day thay don’t matter at all and the next they are a serious menace to society and the Jersey way.
An excellent example of what is almost Orwellian double think!
Report abuse
the watcher(5).
i see it the way you do also.
lets hope they will train localy born to do this job in the end .
Report abuse
“Mad Foetus, if a multinational partnership like Price Waterhouse Coopers wanted to set up a LLP in Jersey a £5M pound bond would not bother them in the slightest.”
This shows an astonishing lack of understanding. No business in the world incurs £5m in expenses if it can avoid that expense. So they set up in the UK in preference to Jersey.
The crazy thing is that almost all major UK law firms are LLPs, whereas Jersey ones are not.
Report abuse
A bond is not a business expense as the money is returned to the depositor on completion of the work or when the arrangement ceases.
If interest is not paid to the depositor then there is an opportunity cost of foregoing that investment income.
Try putting deposits through your profit and loss account and see how far that will get you with the island’s tax authorities!
The law was aimed at large multinational partnerships of hundreds not partnerships of half a dozen solicitors or architects.
I actually listen to State’s debates and the arguments at the time were that we wanted to attract the very best business of this type.
There are plenty of other restrictions on Jersey financial institutions eg only the top banks are allowed to accept deposits.
It works in the island’s favour sometimes eg Jersey came through the credit crunch comparatively untarnished compared with other finance centres
and sometimes it works against us eg Jersey Home Loans is hamstrung in the local mortgage market as they cannot tap local depositors.
The fact is that conservatives, with a small c, control the States with a huge majority and although they want the finance industry they are utterly determined to keep it under their thumb.
That is a far more important factor than any imagined influence of Stuart Syvret and his ‘commie chums’ that is peddled around the more rightwing dinner tables in the island!
Report abuse
Mad Foetus
the £5m is akin to a bond,like a rental deposit not an expense. Your comment shows an astonishing lack of understanding of basic accounting. Sure a bit of a cash flow issue but they’d receive interest on the bond.
Report abuse
Adrian
“Is this what the States mean by diversification? Stay in the same niche and just specialise into new products?”
Well it’s worked for the last 30 years, here’s to the next!
Report abuse
A foundation now is it, a trust , a rollup fund all these vehicles of tax avoidance…same scam different packaging,which is why I like pirates,you know what you are getting with a pirate, they don’t rebrand themselves periodically and come up with,”High seas wealth redistributors” or “Abundance relief adjusters” No they’re just pirates….
Report abuse
joker “Well it’s worked for the last 30 years, here’s to the next!”
Just because Jersey has got away with it for 30 years doesn’t mean it is guarenteed for another 30 years. My money is on major changes for finance in Jersey, as the outside gets to grips with tax avoidance, then its goodbye easy life, and welcome back to reality.
mad foetus “No business in the world incurs £5m in expenses if it can avoid that expense.”
They would if they had no choice. It is just a case of getting to this point then all this milarky will be curtailed.
Pip is correct, this is why the states must be made more democratic with the removal of the unelected five and the Constables. Only then will the majority have a chance to get elected those of a more compassionate and caring culture. Big business men and the rich are not really interested in the ordinary person, as they are only interested in protecting their bottom line.
Any jursideiction thats puts all its eggs in one basket is asking for trouble sooner or later. Is this prudent fiscal planning for a viable future or looking at the short term?
People are scared of Senator Syvret for one reason, they fear he might get rid of their jobs and that they might have to do a real day’s work for once in their lives. It appears they have no concerns for the problems he has brough to light, or if they do, it is only in the fact that they might loose out because of it.
Maybe they should think of others for a change and see how this is affecting the poorest in society where lost taxes mean reduced or non existant services for the majority, just so some can short circuit the system for personal gain?
By all means make a living, but think how your actions affect others. Would you like to be on the receiving end of this or not? If the answer is no then you shouldn’t be doing it should you? If you wouldn’t put up with it why do you expect others to do so? It is about time people treated others as they themselves would like to be treated?
As I have said before this service to self will have to end at some stage before the planet is ruined.
As per this rehash of an old theme, as far as I am concerned, all this will do is increase the population still further, as people are sucked in from the UK and elsewhere to do these jobs. If this is the case then its a waste of time in my opinion.
Those to gain will be big business and the rich who will increase profits due to paying less in wages for migrant staff. The average person will end up with increased taxes to pay for these extra people to live here, as their tax returns alone will not be sufficient to cover all the extras that are required. They will also end up competing with these new people for housing etc and at some stage this will end up with strife, as peoples tempers get the better of them. As with rats too many in a small area and it will end with major problems and a further break down of society.
These are my predictions for the future of this new niche market in the finance market. Thats if outside events don’t overtake Jersey first.
Report abuse
Dave,
The point is simple: why put up a £5m bond in Jersey if you don’t need to in the UK. The idea that any business, no matter how large, regards whether to put up a £5m bond or not as a non-issue shows that you have no idea how sensitive businesses are to tying up capital.
Pip,
The Law was aimed for the big 4 accountancy firms but the furore caused by SS put them off. The bond has put off everyone else – and its not about 6 partner law firms – the likes of Clifford Chance are comparable to PWC or E&Y and could perhaps have been here if we’d played our cards right.
Report abuse
This thread should be linked with the Migration control proposals released thread.
Report abuse
Last I heard, the UK was perhaps the last place you would look for expertise on foundations – they are even less understood there than they are in Jersey.
Foundations are a necessary part of the estate planning/wealth management armoury. They are no more or less open to abuse than trust structures and that is what all-crimes legislation, tax information exchange agreements etc are for. The risks for a trust company of aiding and abetting illegal tax evasion aren’t worth the candle.
What do you people actually want Jersey to do/be? Whilst I would love your economic policies to be put into motion – as it would mean I could buy a house back home for a lot less than is the case now – as someone who loves Jersey and wants it to be successful, I just don’t get it. Whilst Jersey is guilty of relying too much on the finance industry for its economic well-being – everyone knows this, even the intelligentsia in the States – the pathological opposition to all things finance-industry related is bemusing to put it mildly. I suspect that if you guys were turkey’s the Christmas Party would win by a landslide.
Report abuse