‘Tax dodge’ TV show condemned
Tuesday 22nd September 2009, 3:00PM BST.
Scenes from last night’s Panorama programme, in which a Lloyds TSB Offshore worker was secretly filmed giving advice
DAMNING allegations on the BBC’s Panorama programme that a Jersey bank worker advocated dubious tax dodging have been dismissed as ‘sloppy journalism’.
Treasury Minister Philip Ozouf said that there were so many unanswered questions from last night’s prime time report that it was impossible to draw any firm conclusions from the programme.
However, he said that comments made by the Lloyds TSB Offshore worker, who was caught on secret camera explaining how to ‘get around’ EU tax rules, appeared highly inappropriate and were being investigated.
And he said that he would instruct the Jersey Financial Services Commission to use its own undercover customers to ensure that banks were operating within the rules.
John Harris, the director general of the JFSC, said: ‘I do not think it was the BBC’s finest hour. I don’t think the programme was entirely right.’
He stressed that Jersey had very robust and comprehensive anti-money-laundering systems in place, as evidenced by the recent IMF report.
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Was I watching the same TV programme as Ozouf and Co??? to a layman like myself, the programme clearly showed an employyee of Lloyds telling his cilent how to evade the tax man…..AHHHHHHHH that’s the problem, prehaps I am not so clever as Ozouf and co or was it because I was watching a recording and prehaps the recording had been doctored and was’nt the same one Ozouf and Co were watching…God give us strength if Ozouf becomes chief Minster next year..
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Frankly it matters little what we on the Island think, it’s the impression that was given to the UK based audience and of much more significance the UK Government that matters.
For far too long our brave politicians huff and puff but the reality is that the world is changing, and whilst the OECD started the accountability game, the credit crisis will finish it.
The appropriate response to this issue should have been an immediate, transparent and public censure of the corporate governance of Lloyds in Jersey, not the buck passing attempt to avoid the real issue demonstrated today by our politician(s) and Jersey Finance.
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i didn;t know that harry enfield worked at Lloyds.
it would be comedy if not such a tradgedy.
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Oh come on, he was caught on camera clearly advising how to avoid paying tax on the investment. Key question is did he do this independantly or is it bank policy. I can tell you that when worked as a relationship manager for a major high street bank we were advising high net worth clients how to avoid tax by placing their money in Singapore outside of the EU.
Banks are businesses, they want as much money as possible invested, some are more honest than others but this type of thing does happen. Now watch the bank distance themselves from him and sack him – poor bloke I wouldn’t want to be him.
And this bang in the middle of Obama & Brunes war on tax havens – whoopse!
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I was very disappointed by the Panarama programme. It made out that Jersey was part of the UK and it confused the distinction between tax evasion and money laundering. Of course it didnt mention the fact that Jersey has a better anti-money laundering financial system than the UK, as shown by the AML assessment. Ridiculous
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Er thought it was the advice given which was sloppy… this is not an independent case either, have seen this kind of attitude many a time before within our financial services sector in Jersey..
Someone with money= targets met=bonus= new car!!
WAKE UP you incompetent fools.. whats the matter? worried that this proves just how meaningless our IMF ratings actually are? laughing out very loudly (along with a lot of internationally aware)
Funniest thing is that when regulators and auditors are visiting, the companies in question are aware beforehand and have time to make things ready??? Should be spot checks and frequent and by people who know what to look for…
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I do feel quite sorry for that bloke from Birmingham who LLoydsTSB employed at Broad Street. Hopefully all the staff are not as daft!
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I can not understand why the Manager of this employees department did not explain the rules and regulations of Jersey law. Everyone has to pay tax from cradle to grave, who would not know that?
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Well it is obvious that some poor employee will now be used as a scapegoat – Come on, the public were not born yesterday – the Bank has to try and defend its “squeaky clean” image by blaming one employee and thus removing the blame from itself.
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The programme last night did indeed reveal something truly criminal…. but it wasn’t about tax avoidance, it was the state of journalism paid for by the licence payer.
The investigative quality of Panorama has been rolling down hill for some time, something sadly true for the majority of today’s BBC’s prime time offerings both fact or fiction. The ‘episode’ (as emphasis seems to be on drama rather than fact) a couple of weeks ago about raw sewage being pumped into Britain’s seas (an issue at several UK resorts but clearly focussing 90% of the programme on the South West as that’s where it will have most viewer impact) was as, if not more, woeful than last night’s. Panorama now seems to only want to cater for the ‘Daily Mail reader’ who is only interested in short sharp bold headlines edited perfectly to be taken personally for a few brief seconds (as long the average tabloid readers attention span) before the next shocking headline is thrusted into their face. Of course the outrageous headline rarely stands up to the small print below it if you can be bothered to read it properly because either the facts are too thin on the ground or the slant is so biased it’s obvious there is no real story; oh well on to the next big group of words that catches my attention. Trouble is, when did the Beeb start agreeing to do business this way?!
I suspect this tactic is because the BBC have realised that the majority of people watching prime time now do it whilst eating their dinner. How can one concentrate on the detail if you’re shoving a thawed ‘meal’ for ‘two’ in your gob? The Beeb realised that the effort required for proper investigative journalism will be wasted on the majority of those watching, half of which can’t multitask anyway (well according the other half), so instead they dumb down the facts and keep it to a shortlist of sound bites boomed out and tediously repeated by John Sweeny, combined with ridiculous visual stunts like him nearly drowning himself or that repetitive bank hoist (they still needed 10 minutes of drama to fill the gaps only a half hour slot) – Get the main point across, sod the detail which if included would collapse any real story potentially on offer like a house of cards!
Media like this makes you wonder what Murdoch is on about the Beeb having too much control. If that’s the quality the Beeb have to offer they may as well sell their share up to the tycoon, as we wouldn’t notice the difference, and invest in something decent.
So what’s this all to do with off shore banking or the article? Well may be it’s because the average on-shore domicile stands to lose more paying their annual £140 TV licence for dross like this than the legitimate off-shore business ever lost them!
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I can’t believe the BBC want £145 per year for this type of Daily Mail sensationalism. The program seemed to rely on the fact that the UK layman would fail to distinguish between tax avoidance, tax evasion and money laundering.
Was this program commissioned by HMRC in order that they may be presented with dubious evidence upon which to base an investigation into a Jersey Bank???
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Isn’t it the case that if a banker or another financial adviser gives investment advice he should be mindful of the possible tax implications?
If someone invests money in a bank and then does not declare the interest for tax purposes then that is their affair.
For a banker to collude is at best unethical and at worst illegal.
What would Pip Ozouf’s attitude be if the reporter had claimed to be a Jersey resident trying to hide £4M from the Jersey Treasury?
You win some, you lose some?
Somehow I think not!
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It’s a much bigger picture than ‘Manager of Department’ ‘Rules and Regulations of Jersey Law’ and ‘everyone has to pay tax’….this chap works for an offshore subsidiary of a global bank.
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Why on earth do offshore financial authorities always fall back on the age old mantra that they don’t do money laundering when confronted with tax evasion allegations. In this event it wasn’t an allegation, it was a fact.
That’s like telling little Johny not to steal Sally’s sweets, and Johny replies but I’m not beating her up!
Face facts, the EU Commission is reading the BBC transcript and implementing changes to the EU savings tax to avoid this type of routing payments.
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Comment 8 Ann – “I can not understand why the Manager of this employees department did not explain the rules and regulations of Jersey law. Everyone has to pay tax from cradle to grave, who would not know that?”
Simple, because they have adopted an aggresive policy of attracting high net worth individuals who do not want to pay tax. Oh sure the bank will disown him and you won’t see any mention of the policy in bank literature but he would have been expected and well rewarded for following this unspoken policy.
Welocme to how it really is offshore!
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Well that dynamic duo Tezz and Fill will no doubt be able to talk us out of this one , I would go and watch their show it must be hilarious!!!
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Farmer Geddon you are very defensive and are taking this rather personally.. .
Its is ones right to make legitimate observations and not be afraid to voice concerns, after all that is a requirement of KYC in conjunction with our regulatory requirements. Can tell that you are employed within the type of industry which is what this is all about. Why is it that everybody else on this forum has said much the same but in a different terminology, more to the fact WHO are you?
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Panorama is not the Financial Times or any other periodical aimed at a sophisticated audience that is familiar with the subject.
It is aimed at the intelligent layman and not the expert and I thought it did a fairly good job of dealing with the complex issues of money laundering, tax evasion and avoidance.
I worked in the finance industry many years ago and I was the weirdo in the office that read the Financial Times.
The Daily Mail and Express were the papers of choice among the grunts while senior management went for The Daily Telegraph.
Multiple copies of the FT, Economist etc paid for by the company were available but I seldom saw a member of staff or a client pick one up.
Looking in my local paper shop in the early morning I think The Guardian has sales on a par with The Financial Times and this is in a supposed centre of financial excellence!
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Good call Pip and thanks for defining the difference between an intelligent layman and ‘expert’ (note inverted)
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#4 Thicko Micko, #8 Ann
No one seems to understand what the EU Savings Directive is about. It is a tax on people who are resident in EU countries who do not disclose their foreign investments to their local tax authorities. Income generated by the investments is therefore taxed at source within the EU and non-EU countries such as Jersey who have agreed to implement the directive, on the basis that these people may not declare the income in their own country. If the investment is declared, no tax is payable under the directive.
A very legitimate question is to ask: why would someone not want the tax authorities in the country in which they are resident to know about their investments. One possible answer is because they’re not declaring the income they receive from these investments, ie they are evading tax. However, another possibly is administrative: if you are a high net worth individual, could you be bothered to tell your local tax authority every time you bought or sold an investment? Much easier just to put your money into a scheme like the one described. You still declare the income if you’re honest but you don’t have the hassle of the extra admin.
The problem with anti-money laundering and anti-tax evasion rules is that they complicate things for the law-abiding and mostly fail to catch those who are actually doing things that are illegal. Client due diligence is a joke and, at best, provides a starting point for tracing criminals who are usually long gone. In the meantime, it costs companies a fortune to carry out and is a hassle for individual investors.
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Totally agree with CP above. Good observation.
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Take it on the nose guys…it should not have happened…..and as any good retailer will tell you…it’s how you handle the complaint that really counts….as usual we go for the own goal because our politicos have no idea about MESSAGE.which is why Paxman et al eat them for breakfast,they should not be let loose to represent us…hire Max Clifford why don’t you.
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It was sensationalist tabloid style journalism. There was no alternative view given, the short clips we saw of the lloyds banker could be completely out of context – for all we know the undercover man incited the comments and the lloyds man trying to find a level with the potential new customer just went with it – even in relation to his cars! The undercover man might have just asked what cars do you like/have? We just weren’t shown that bit. We only got see tiny extracts of the meeting and heard nothing of what the undercover man said about himself.
In relation to the hong kong fund, it sounded like a legitimate method of tax avoidance. In relation to the income tax comment, the lloyds banker was right – what a UK customer includes in his delcaration to the UK revenue is the customer’s concern not the bank’s…. even more so in this case where it was entirely reasonable of the lloyds guy to assume that the multi millionaire businessman he was talking to would know his obligations to the taxman.
Not really sure what the banker actually did wrong other than allow himself to get duped.
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I’ll admit I didn’t watch the programme because I am now thoroughly bored with the same arguments on this matter.
However, well done to Ozouf for announcing so publicly that they will get the FSC to send out their own ‘undercover’ customers
That’s the way to catch the ‘baddies’.
Sure enough, one man will be made a scapegoat.
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‘However, well done to Ozouf for announcing so publicly that they will get the FSC to send out their own ‘undercover’ customers’
What next?
Police officers with speed cameras at the Bouley Bay hill climb!
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No one has looked at the training he was given….he shouldn’t lose his job as it is down to the poor training he was given…Lloyds should hold their hands up, admit they are in the wrong and let this lad alone and not lose his job because of the lack of training given, please remember it’s all in the training and if that is not given thoroughly there is room for error. this lad was the scapegoat and why should he be punished….Lloyds review your policies and procedures, introduce maker checker and give better training.
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The UK are desperate to close us down and this helps them get the general British public on side, I was very dissapointed at the Guy from Lloyds but not surprised, showing off to a wealthy customer is what bankers do best. He will become a well known face in the finance industry, much to his own detriment. It was annoying that the program negleted to take comment from the Jersey Financial Services or Mr Ozouf at least then we would have been able to defend ourselves.
Journalists can read whatever they like into a conversation and interpreting what he says as tax evasion is just showing one side of the coin, Wealthy people often get rich by making their money work most effectively and using accountants to help them pay as little tax as possible, they have been doing this for many years. this is not called tax evasion it is called being tax efficient! I bet a few MP’s have accountants working their books for them.
Lets just hope they do not use this as an excuse to close us down with all our eggs being in the same (finance) basket it is a risky time to make enemies of the world leaders!
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Pip Clement #19
“Panorama is not the Financial Times or any other periodical aimed at a sophisticated audience that is familiar with the subject.
It is aimed at the intelligent layman…”
With respect that is not the point. All papers have an agender of some kind but you have a choice on which you buy, if you choose any. The BBC is a legally bound subscription we are forced to pay and that should be respected with a balanced view with all subjects they choose to cover. If they are not prepared to do that then leave it to Sky News or Fox to put their pay per view slant on things.
Media polls demonstrate time and time again that the BBC is seen by the British public to be the most trustworthy source of factual information. Therefore they have a responsibility to be fair in all they report and not report it for drama sake to stir middle Britain with a tabloid mantra. It was almost as if the producer had been hurt by the banking crisis and went on a personal crusade to keep everyone angry with it. The footage could have been about any one of the hundreds of intermidiatory services provided by any bank anywhere. It (unfortunately for Jersey) just happened to be here. They clearly then made a poorly constructed 30 minute programme based around the 4 minutes of car crash footage.
From the footage I don’t condone the actions of this guy, but to be fair the producers would have probably spent more time carefully edditing the footage to look as bad as possible then they spent on the entire programme. Legitamate off-shore and on-shore finance/banking is a complex subject and needs a fair balanced view and detail it requires. 30 minutes doesn’t cut it.
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thoughts of Nelson Piquet Jnr racing driver come to mind here,who’s going to be the “fall guy”
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I notice there’s a few people here dismissing the program. You guys obviously work in the finance industry. I wouldn’t trust a banker as far I could throw them. The current worldwide problems has shown the finance industry to be corrupt. Well done to the BBC
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I watched the playback on BBC website and I couldn’t help but feel sorry for the Lloyds employee – I’m a sucker for a fall guy. Seemed to me he was trying to create a relationship with his customer and a little camaraderie. His career is finished and the majority of what he said wasn’t incorrect, if only he has said “you are legally obliged to advise the UK taxman” he does look a bit silly but we’ve all had those moments, fortunately not all caught on camera.
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To call uncovering what was/is a blatant scheme to circumvent the EU Savings directive as “sloppy journalism” is just ridiculous. Sure there were some annoying keystone-cops sketches during the programme, but the fact is they uncovered a clear cut abuse of regulations. It was definitely more in the “help the client evade tax than avoid it” zone. How many other schemes by other organisations of this type over here? Why do some many of our Trust companies have operations in Switzerland where facilitating tax evasion by non-Swiss nationals is not a criminal offense? I think this undercover reporting actually gave us some good insights into the murkier corner of our finance industry where profits and new business targets can make a mockery of following the spirit of the laws.
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This man is not a banker he is a product salesman and seemingly being paid very well for it if his choice of cars is anything to go by! I wonder how much he stood to make as a bonus on this £4 million sale?
It would also be interesting to find out his background and qualifications. No real qualified banker would dream of acting like this. It is a shame that there are so few of them left these days, they have all been elbowed out by the guys in braces.
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Lot of good points here (32,29,28,24,5,11,& 12).
I previously worked at LTSB. A junior staff member would not get the huge bonuses the programme insinuated but yes he would have sales targets to meet.
The product he was discussing is an Offshore Fund of Corporate Bonds – structured legitimately (with authorisation from the appropriate Jersey bodies) to ensure EUSD does not apply. This is not the staff members fault, he was advising the client that the product is available.
I believe the show was heavily edited. It was clear he was trying to build rapport with the client and yes, he could have phrased the the clients obligation to declare tax clearer.
I am disgusted that his face was not hidden, this person will find it very difficult to find a job in Jersey going forward.
I also feel that it was not clear we have our own government in Jersey and are regulated by the JFSC. They should have had input into the programme for sake of balance. The fact that we have just received an excellent report from the IMF confirming that we have higher standards of regulation & supervison than the UK were not mentioned.
This is bad publicity for our Island in a time when all we have left is our Finance Industry.
Worrying times.
Ii have complained to the BBC regarding the lack of balance in the programme.
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Tony #30, nice analogy
Beaumont #31, I think Joker #29 is right about the BBC. I’m not saying the programme doesn’t have a point (I chose not to watch it), but every company within the media has their alliances and their own agenda. You’ll usually get a grain of truth but that’s about it.
If you lived in the UK you’d realise that not everyone trusts the BBC. The Scottish and Welsh know just how completely inept the BBC can be and how questionable their investigative efforts can be (programmes that show England in a bad light in relation to their treatment of Scotland or Wales, are religiously bumped to late times and one of the ‘lesser’ BBC channels). They care about London and only London and I reckon they probably view any potential closing down of offshore finance as beneficial to London!
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#31 Beaumont
The current financial crisis was caused by banks’ difficulty valuing derivatives and was compounded by people borrowing money they couldn’t repay to fund a lifestyle they couldn’t afford. Corruption has nothing to do with it.
#33 Dave Stephens: ‘It was definitely more in the “help the client evade tax than avoid it” zone.’
Really? None of us have seen the full conversation and, even based on the snippets broadcast, I don’t understand how you’ve reached this conclusion.
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The truth hurts; and the truth is that however good or bad you see this piece of journalism, it will have been watched by several million people in the UK, many of which are tax payers who are taxed at source. There is no option to pay later (if at all), which is what many wealthy clients of offshore centres do. Jersey politicians are behaving in a defensive way for good reason; they know that this is all about damage limitation. For all their comments about ‘sloppy journalism’, damage is what has been done. The filming of this incident didn’t happen in Guernsey or the Cayman Islands; it was in the politicians’ own back yard while they were in charge. Although it probably could have happened in either of these other two financial centres, it happened in Jersey, and the UK taxpayer is actually very grateful for bringing this to his attention (however naff some of the clips were in the piece).
People in the UK are very angry that their taxes have gone to support an industry that is playing a constant game of bluff and which uses leverage against the UK Government to get what it wants. Take the ludicrous situation of the UK Government not capping bankers’ bonuses because of the threats that the best qualified and highest paid will go to other financial areas taking their skills (and tax revenues) with them. Offshore branches are just an extension of this industry. In terms of playing games, you could say that pretending you are squeaky clean by having regulations in place, when behind closed doors (in front of secret cameras!) you say whatever suits you to ensure the money keeps on rolling in is just a variation on a theme.
The reality is that it’s a competitive market between financial centres. The island may no longer take suitcases of cash from people arriving on the island by plane or boat, but the door is very much open for money to come into the island. A very strong message was sent to the world when Jersey put up the taxes of its local people to subsidize its finance industry (note the similarity, ‘if we don’t make our corporation tax competitive, people will go elsewhere’).
The sad truth is that whatever regulations are said to be in place, the UK viewer is left feeling that some of his hard-earned taxes have ended up in the form of a luxury car owned by a person in the Jersey finance industry who isn’t too fussy about his own reputation, that of the company that employs him or the island that permits this UK bank to operate in an offshore capacity. I think the words ‘tarnished’ and ‘reputation’ can legitimately be used on a number of levels here.
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Is this just the tip of the ice-berg? As far as I am concerned tax avoidance should be made illegal as well then we wouldn’t have those using “grey” areas to circumvent taxes. If people think this is a one off they must be daft. So much for being squeeky clean then.
Beaumont valid points, finance is all about making money, morals and ethics don’t feature in it, so it comes as no surprise when the darker side comes to light as far as I am concerned. Unfortunately when making a living quite a few will turn a blind eye to bad practices and try and diminish them as one offs etc, and talk up their own self importance in the scheme of things.
Jersey has had other irreplacable industries in the past which have passed into history and finance will be just the latest in this line at some stage.
If the States had any nowse they would be looking to diversify away from finance as soon as possible instead of waiting for the inevitable to happen. All I can see is a big South Sea Bubble growing in Jersey, what happens when it bursts? What will the States do then beside panic and run around like headless chickens?
Do you think the average Joe’s living in higher tax areas are pleased to see some of their rich fellow tax payers avoiding tax by using low tax areas? A loss of taxes means increased taxation on those lower down the socio-economic scale, or reduced services for all. This is wrong and shouldn’t be happening.
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Is it just me or do people have a self obsessed sense of righteosness?
Here we have a guy that was doin his job. He was advising what was meant to be a very rich client as to the best things he could dp with his money. He didn’t actually break the law at any mpoint during the program, all he did was advise what could be done.
Before anyone makes any allegations about my wealth – I am far from wealthy and don’t work in the finance industry. That said, if I was wealthy enough to be able to afford an accountant or even a private room with a banker to discuss my finances (other than asking me when I am going to clear my overdraft) the advice that I would hope to get would be the stuff that saved me the most money. What is the point in being an accountant if all you can do is turn round to someone and say “um, yeah. you need to pay 20% tax like everyone else”?
I can give people that advice as can a 4 year old. There’s an age old line “Money goes to Money”. It’s easier to earn money if you have it behind you than it is if you are poor. Straight fact of life. If you want an alternative I believe North Korea are still offering a communist lifestyle. Your choice people. Maybe it’s time to stop being jealous of those better of than you and just get on with your lives!
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The show the edited to make the employee look worse.
you can see where its edited by the fact the guys head is in different places!
As usual the bbc hatchet job makes jersey look worse than it is. Remember panorama on Haunt de la Garenne?
And no, i dont work in finance
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Some things in the programme don’t add up to me!!!
Why did they “secretly film” Lloyds in Jersey but not Northern Rock in Guernsey?
How did they get the camera in….if a bag or briefcase was placed on the table surely it would have been quite obvious?
Does anyone even know this employee? There have been rumours it was an actor and this was staged.
Was it even filmed inside Lloyds Jersey….you only see a room, it could be anywhere?
When was it really filmed? Recently or a while ago?
You don’t hear the employee asking any questions relating to other assets or even source of income etc before he could actually do his job and “advise” on investments! I don’t recall seeing the employee make any notes or take down any client information……surely this is a MUST when a client shows interest in investing £4m?
If it was legitimate then that’s retail banking for you. All they care about is meeting targets and bringing in “new” money. Thankfully most private banks are a lot more professional.
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When I worked in retail banking many moons ago I was always taught that UK residents were not to have accounts with us because there was no benefit…they still had to declare income to their tax authority so we referred them to their local branch. This was also the same for investment advice and we always referred them to UK offices (same for US citizens).
When or why did this change?
If this report is genuine then not only will the banks and more importantly Jersey’s reputation be tarnished but the EU will have a lot to say about encouraging avoidance of EUSD.
If Lloyds are flagrantly encouraging this sort of unethical advice just to bring in new business then they should be punished.
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Michael #39. I understand the points that you are trying to make. However I believe you are wrong.
You suggest that ‘Here we have a guy that was doin his job’. Perhaps, but his job is as an employee of Lloyds. The only reason that Lloyds still exists is that it was propped up by the UK government i.e the UK taxpayer (just like another Jersey institution, RBS who probably offer the same advice). Therefore this guy is advising clients to divert income from the Government (effectively his employer).
Hence public services will suffer as a result of his advice.
That cannot be ‘just doin his job’?
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#38 Adrian
“Tax avoidance should be made illegal”. This is way too simplistic. Do you pay tax at a flat rate of 20% (assuming you live in Jersey) on your total income? Or is your effective rate actually lower than that becuase you claim the various allowances and reliefs which are available to you? If the latter then you are indulging in (completely legal) tax avoidance. Tax planning / avoidance / evasion is a continuous spectrum and it is simply not possible to draw a line accross it and say that everything on one side is legal and everything on the other side is illegal. Some tax authorities around the world have tried (so-called general anti-avoidance rules) and they have been unambiguously demonstrated to be ineffective and unenforceable.
Everyone has a moral and legal responsibility to pay the correct amount of tax in the jurisdiction where they live or do business, but equally everyone is entitled to arrange their affairs so that the tax applied under the relevant laws is the least that it could be. And going back to the BBC program, depending on what facts the fake millionaire told the LTSB guy off-camera, he may have been doing just that. Without the other side of the conversation we have no way of knowing.
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To all those above complaining about the quality of invesitigative journalism: you are missing the point by a country mile.
When all is said and done, Jersey does tax avoidance or ‘wealth management’ for high net worth individuals. Now, don’t get me wrong, it is terribly well regulated and totally above board. It is perfectly in accordance with international laws and accords and we were absolutely resplendent in our glory as one of the first movers to the OECD white list. But, you see, none of that, none of it at all, makes it right.
Well and good, you can disagree. But, for me it’s all just a bit to close to home. Because, you see, and I may despise the place and all those who are running / ruining it, but, when all is said and done, I’m actually from the UK. (Which used to be quite a nice little island itself once upon a time). Back there, thnaks to Jersey and places like it, the tax burden is shifting inexorably from those most able to make a contribution to those who can’t quite afford the very best tax advice. So, it’s MY family and friends back home, the affable, muddling, middle class that are now increasingly carrying the burden and that’s simply just not right.
Personally, I’ve had quite enough dinner table arguments with friends and family from home and (beautiful as it is) I’m leaving this place at the end of the year. **cue applause**
Oh and Jersey, stop living in denial please. The first step on the addict’s path to recovery is admitting that you have a problem. Gold stars for regulation are great: be proud of them. But, good regulation only enforces the rules – and be in no doubt that you are not making them.
So to Panorama. Put simply: a poorly executed program, making very salient points.
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I thought the programme was very poor and obviously biased. Portraying bankers as robbers with tights over their heads, sniffing money is clearly not unbiased, public service journalism. Similarly, the editing of the video seemed calculated to give a rather simplistic impression. It may have been an accurate impression but the editing was so significant we cannot know.
I would suggest that the Island consider whether it wants to continue to support the BBC’s enforced monopoly. I find it offensive that I have to pay £140 a year to be delivered such rubbish. BBC Channel Islands does nothing that is not done just as well by the commercial sector and with the move to digital, there is no reason why BBC channels should not be paid for by those who want them.
There is already a growing belief in the UK that the BBC has got too big for its boots and should no longer be able to demand the licence fee off everyone with a TV. I think the States should quickly pass legislation to the effect that the BBC can no longer demand licence fees from Jersey residents: if they want to change to pay per view or subscription only, fine. But Channel 4 can make programmes of a higher quality than this and I find it unacceptable that I should be forced to pay for this cheap, sloppy journalism.
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Britabroad
That’s commendable but you really should be looking closer to home first. London makes far more money than Jersey does in tax ‘evasion’. In fact neither could exist without the other.
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Cool beans. Tax havens serve a useful purpose – allowing the aspirational and successful to prevent what they’ve earned falling into the hands of the Gallaghers. Still, I imagine this is a perfect excuse for anti-Western socialists to stamp Jersey into the dirt, where they believe it belongs.
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There are areas that the States cannot legislate in or would find it very difficult eg reinroduction of the birch or death penalty and I think stopping the collection of the BBC licence fee falls in to this category.
Besides it would bring the pensioners in to open revolt when you cut off their supply of Songs of Praise and Eastenders and as they form a majority of the voting electorate you could see a bit of a clean out of the States at the next election!
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“There is already a growing belief in the UK that the BBC has got too big for its boots”
Is that why its popularity is at its highest for ages? You do talk some reconstituted outflow detritus, mad foetus. What has the BBC got to do with it?
You know damn well that the research is out there and is gaining credibility all the time. your nonsens eproves the inadequacy of the counter argument.
There is no defence for this legalised theft.
And I know plenty of folk just like that geezer, mostly worse as they are Southern Public School types. Rich already on a Trust, selling dirty products to richer sociopaths with a potential propensity to criminality. Though you just wouldn’t know.
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Peter I believe you use poor excuses for those that should be paying a lot more. As per a few basic allowances for the majority this pales into insignificance when compared to the big fish. Lets us remember the rich also get basic allowances like the rest.
However it becomes unlevel when they end up paying hardly any tax on their big incomes due to accountants who bend the rules as much as possible. Yes it might be legal by law but it doesn’t make it right does it?
I myself would quite happily pay tax on all my income if this applied equally across the board and the big players were taxed properly also. So therefore yes it is as simple as getting rid of tax avoidance. It would also make people more social/team players instead of being encouraged down the self serving greed route, under the guise and excuse of free markets and capitalism.
I see mad foetus is getting a bit tetchy over all this. Why would this be I wonder? Surely it can’t be to do with showing his beloved finance in a bad light?
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I wouldn’t be concerned, most sensible people here in the UK don’t pay much attention these days to the BBC, this was just another example of embarassing ‘journalism’, the fact that it began with striped suits with tights on their heads sniffing wads of notes gave you a good idea of how impartial the report would be!
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(33) sharpel, i agree, had this chaps face been blanked out( nice bloke so i am told ).
i could not of made the “harry enfeild ” reference.
i am sorry if it has cause any hurt, on reflection.
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Adrian, could you please explain your magic bullet for getting rid of tax avoidance? Tax authorities and legislators around the world would be delighted to hear from you. The whole point is that you can’t define tax avoidance, and if you can’t define it then you can’t legislate against it. Tax regimes which have attempted to do so (Canada, for example) have failed. Planning your affairs to minimise the amount owed to Ceasar is legal and legitimate. Tax evasion is illegal. Where the distinction between the two is not clear it is resolved by the courts on a case by case basis.
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I think the states would be well within their powers to ban the license fee. However, we would no doubt loose radio Jersey, the radio 1,2,3,4 relays and our analogue TV reception in return.
Of course we could still recieve BBC TV via free-to-air satellite or sky, along with the rest of Europe. A saving of £145 per year would mean every islander could easily pay for a dish and freesat box so the states wouldn’t need to bother with upgrading our transmitter to accommodate freeview.
Pros: A quick and cheap way of completing digital switchover
Cons: Only channel 103 available on FM
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Well the hot air generated by this program continues,and I suggest, for all it’s failings as far as manner and presentation are concerned, anyone who believes that this Lloyd’s employee was giving the wrong or illegal information to this prospective customer please explain chapter and verse just exactly where the information he gave was flawed or illegal?
I watched this whole program quite carefully and especially with regard to this much vaunted part involving the Jersey (?) LLoyd’s employee. Whilst he had an unfortunate (And not very local) “Del-boy” image and delivery, which I suspect is a hit with some clients (Wealthy foreign and UK resident football players?) but which to me makes him an absolute patsy for a media “Set up” scenario such as the BBC appear to be becoming well known for in their approach to the Channel Islands!(Charlie Hungerford anyone?),in this instance he appears to explain quite correctly (For all the flannel about payments to and from Hong Kong, primarily designed to show how complex a transaction this wasn’t) that the prospective customer is responsible for his own tax affairs with his appropriate tax authority!
In this our “Banker?” is quite correct!
Since when has it been the Bank’s responsibility to enter a tax return on behalf of a customer?
A customer, of whose financial affairs it may by no means have a full picture?
There are standard procedures and controls laid down under “Due diligence” procedures in force in Jersey which endeavor to establish a prospective customer’s “bona fides”.
Procedures which are the same as those adopted throughout the UK and the EU and in due course possibly worldwide!
In none of these jurisdictions is it the Bank’s responsibility to make tax returns on behalf of their customer, unless specifically contracted to do so as a service, or where there is a specific requirement to disclose specific income or deduct tax at source on a particular investment earned in the jurisdiction itself.
There is a responsibility to report suspected criminal activity (Tax evasion,Terrorism,Fraud or proceeds of crime)but it is in the first instance the Customer’s responsibility to declare taxable income, and with a prospective client there is absolutely no reason for the Bank to assume automatically that all such customers are guilty of tax evasion before a working relationship has even started!
And this is where we now have a fundamental problem, in that those seeking to revise this approach are seeking to reverse a long held fundamental individual right and freedom under UK and Jersey Law, that a person is presumed innocent until proven guilty, not the other way round!
As for the self image of this particular Lloyd’s employee,whilst we are what we are,it is perhaps worth pointing out that it was person’s whose personal motivation could be summed up as “Aspiring to own the latest model of Porsche” who figured very center stage in the financial crash at the end of the 1980′s! I see he has the big tie but has managed to shed the wide braces in lurid colors that went with the image then.
I have no doubt that this individual is competent at what he does but his image needs “Work” (As did Mrs Thatcher’s and Gordon Brown’s, and Tony Blair’s etc,etc so he’s in good company!)
Maybe it’s time for a bit of finesse to return to the financial world,and for training of staff in such roles in Bank’s to emphasize the need to be less “In ye’r face” and more relaxed and open in approach.
But perhaps not too relaxed !
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“#
Sarah
Posted September 23, 2009 at 8:36 pm
The show the edited to make the employee look worse.
you can see where its edited by the fact the guys head is in different places!
As usual the bbc hatchet job makes jersey look worse than it is. Remember panorama on Haunt de la Garenne?”
Sarah, I don’t know if television is a new discovery for you, but editing down extended sections of a recording to show only the relevant sections is normal practice in programme making. Did you expect them to show the entire meeting, no matter how long it was? 15 minutes? 30 minutes ? An hour? More?
You raise a point about the Panorama coverage of Haut De La Garenne. Jeremy Paxman certainly misquoted Frank Walker, but that is neither here nor there. The BBC footage caught Frank Walker unawares showing a primary concern for protecting the image of the island from being “shafted”, which is a very important point.
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#41 BS Deluxe: it depends on whether the UK resident is also domiciled in the UK or a ‘non-dom’. If the former, they will pay tax on their worldwide income in the UK. If the latter, they will pay tax in the UK on their UK-source income and the worldwide into only insofar as it is remitted to the UK.
Imagine a non-UK, non-Jersey resident who’s worth £100m. He comes to the UK for five years to work and is declared UK non-dom. He remits virtually nothing into the UK and lives on his employment income while he’s there, which is taxed by the UK. Meanwhile, he puts the £100m he has already earned into Jersey where, in the case of bank interest, he will not be taxed at all and in the case of dividends he will be taxed at 20 per cent. If his investments increase in value, he will pay no capital gains tax on the gain.
There are big advantages to having a Jersey account for UK non-doms!
#44 BritAbroad
I think offshore tax havens are the least of your problems. The main reason the UK middle classes are being taxed to the hilt is to fund the massive and very inefficient expansion in the public sector that has taken place since 1997.
Ultimately, it’s a balance: if you allow very rich people to legally avoid tax, they do so but they stay in the UK and spend their money there. Many will run businesses and create jobs, wealth and additional tax revenue. If you tax them too much, they leave. Do you want to cut off your nose to spite your face?
I quite agree about Jersey not calling itself what it is though. We’re a tax haven. We need to get over it.
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Just why are people getting their knickers in a twist about tax avoidance as if it is a dirty word, it is not just for the wealthy.
Scenario: I have a savings account, I pay tax on my interest at the end of the year – if I know I will have many commitments a particular year and would prefer to pay less tax (no don’t jump at the word ‘less’ bear with me)I put my money early in the year in a one year fixed account, I shall pay tax on the interest when I receive it next year. Because of that I may get a higher rate of interest and therefore pay more tax but it suits me that way – they call it freedom of choice. Voila! tax avoidance at its best – I call it common sense, I’m just a layman. Tax efficient and there hasn’t even been any minimising.
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Panorama and the BBC have been politically influenced by the present government in the UK for some time. Jersey is clearly on the hit list of Brown and his doomed government.Don’t imagine for a moment that somehow we’ll survive without a fight.Time to unite, whatever your political views.
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Peter 53
I think you will find that in today’s financial world “Tax avoidance” is clearly defined, and is set apart from “Tax evasion” which, in the past, was often intermingled with the former.
We all have the right to reduce the amount of taxes we pay (considered tax minimization/avoidance), as long as it is through legal tax-planning strategies.
However, many of the more agressive strategies have recently been listed as “abusive tax avoidance strategies” which makes them illegal (e.g. “Multi-layer transactions” which conceal the true nature and ownership of the taxable income and/or assets; “Tax-shelter investment schemes” which reduce tax liability without changing the value of the user’s income or assets). Often, these schemes channel funds through trusts or partnerships to avoid taxation, which roughly translated means “dishonest people/organizations” are forcing the honest tax payer to make up for what they INTENTIONALLY AVOID PAYING.
And although I feel embarassed (not sorry) for the bank employee, I firmly believe that he was proposing a scheme that was created in the boardroom for the sole purpose of TAX EVASION.
So well done BBC!
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Joker, are you seriously saying London could not exist without Jersey?
Nick, describing the person as ‘not very local’, why do you feel the need to mention that? Do you think local people would not give the same advice?
The exaggerated opinions of this place and the pettiness of its people NEVER cease to amaze me!
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It is quite clear that the delusion is endemic here.
If all these friendly tax avoiders were doing such an efficient job, where the hell is the investment? Why are there more and more people unemployed?
You’re all wrong.
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Arnald,
As ever, you are wrong and I am right. There is a debate on the BBC licence fee in the UK: it’s in the Times today:
http://www.timesonline.co.uk/tol/comment/columnists/guest_contributors/article6848072.ece
We shouldn’t have to pay a licence fee to this outdated, far-left organisation. The only reason we do is this piece of legislation:
http://www.jerseylaw.je/Law/display.aspx?url=lawsinforce%2fconsolidated%2f06%2f06.110_Appendix_Broadcasting%26Communications(Jersey)Order2004.htm
It’s only an order so it could be repealed this afternoon (I think it’s in Senator Le Marquand’s court). So come on, let’s do it. I don’t want to be forced to pay for biased reporting aimed at destroying my livelihood.
Let’s make BBC subscription only and watch the quality of broadcasting rise. Jersey can lead the way. Do it now.
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#46 Nick
‘anyone who believes that this Lloyd’s employee was giving the wrong or illegal information to this prospective customer please explain chapter and verse just exactly where the information he gave was flawed or illegal?’
Nobody is saying that the information given to the client was illegal, or ‘wrong’ in the sense that you use is. What is ‘wrong’ is the way the person involved delivers this information and how his choice of words changes the essence of the message.
The bank employee uses the sentences; ‘to get around the EU Savings Tax Directive’, ‘let’s brainstorm how we can get around this one’ and worst of all ‘it’s of no interest to us whether you tell the tax man’.
You can debate forever the editing process, but you can’t deny that he said these words. He wasn’t reading from a script.
If delivering information to new clients in the way this banker did was acceptable, you would find it in common usage in Lloyds Bank published literature for prospective clients.
Let’s just compare the banker’s delivery….
‘it’s of no interest to us whether you tell the tax man’
with Lloyds own published information
‘You will be responsible for telling the relevant tax authority about gross interest in case there is a tax liability later on’.
Note the difference? I think the latter is the kind of professional advice that most in the industry would aspire to.
The rules are clear. Interest is paid gross, but tax liabilities (where due) must be paid.
The banker’s comments are described by the Secretary for Tax at HM Revenue and Customs during the program as being reckless behavior that could be interpreted as a signal to a customer not to make a return to the relevant tax authorities. That sums it up pretty well.
You could take the charitable view that the banker involved was having a bad day. I think the more cynical, UK-tax-paying public (which has bailed out the institution that employs him) will be left wondering how many more employees in offshore banks in Jersey may be adding their own twist to published information. Mentioning the Lotus he just exchanged for a new Porsche may just have tipped a few teetering on the edge of the charitable camp into the cynical one.
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debatable
Obviously the City of London would remain but London’s finance centre would be hit drastically because if you ‘get rid’ of Jersey you do the same for all off-shore centres and that means a massive proportion of London’s finance disappears overnight. Why do you think off-shores have operated freely for so long? Because on-shores, especially London, make a fortune out of us.
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Realist 60
You’re right, Jersey is under fire, and slowly but surely the States will be forced to accept the “new rules” of the “old game” of tax dodging. But it won’t happen overnight, and it will be done in such way as not to damage the population…no government would dare abandon 95,000 hungry castaways!
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‘London makes far more money than Jersey does in tax ‘evasion’. In fact neither could exist without the other.’
Get real Joker!
The loss of Jersey as a tax centre would be a minor inconvenience to London.
It is a major capital centre for trading in shares, forex and commodities and much of that would continue with or without the island.
The simple fact is that the whole of the island’s finance industry is smaller than one of the monster banks that operate out of the City in terms of personnel or investments under management.
Jersey goes belly up, multinational banks move their activities here to Hong Kong!
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mad foetus
Far left? The debate should be around their public scope and their commercial operations, but to slag it off as far-left is just hysterical tripe.
Realist
Another one. Jersey is under fire because it facilitates the destruction of global societies.
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No Jemimna, funnily enough television isnt a new thing for me at all. I do ‘get it’ that programs are edited but the way they are edited is different.
This was edited to make teh guy look worse. And why werent the people from Guernsey shown? Why do they get away without being named and shamed? This guy will now have lost everything thanks to one session of bragging, yet the ones in Guernsey got away with it.
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Arnald,
Of course the BBC is far left. It is packed full of humanities graduates. It is publicly funded. I don’t think anybody has ever suggested it has a right wing bias. Or are you seriously so far gone that you think showing bankers as pigs sniffing money is, in fact, “balanced reporting”.
But it doesn’t mater – all you need to know about how vital Jersey is to the UK’s wellbeing is clear from the fact that even a Labour government looking at a landslide defeat won’t close us down. Because without offshore capital flows globally would diminish and we’d all be much poorer.
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Peter no tax allowances means you can’t avoid paying tax on your total income can you? If you try you are going to get done for tax avoidance and get fined when found out.
This removes all grey areas and the need to employ tax consultants and lawyers. Why the need to have a complex system when you don’t need it?
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Joker,
The City of London would take a bit of a hit but not enough to make it collapse. I’m just pulling you up on your point. The financial sector of London does not need Jersey or the offshore centre to exist. You seem to have an inflated opinion of the role of Jersey! There is a big wide world outside of that tiny rock!
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mad foetus you are spouting right wing propaganda to keep the surfs at the tread mill as far as I am concerned.
Just incase you haven’t realised the gulf between rich and poor is widdening, so this offshore stuff can’t be as good as its touted can it?
What happens if the EU says enough is enough?
Would the UK side with offshore finance and go against the EU or not? This is the big question people need to be asking.
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A couple of thoughts :
Was ANY other bank visited by the BBC reporter, and did he receive a “thank you but no thank you” during these other attempts to secure a tax-free income for the £4million?
For if the BBC reporter managed to find only one person willing to give him time, where was the mention of the other’s who had shown him the door, without offering to provide a haven for his money?
And, where would a UK business person be able to transfer such an amount from under the nose of the HMRC? The business person would have some explaining to do if his income and assets took a £4million dive following the spiriting of this sum offshore.
All a very unlikely scenario in the real world.
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Adrian,
There is no “big question” people need to be asking. People need to just get on with their jobs and keep their heads down. Whatever happens to Jersey will be decided by others and the buffoon on the TV doesn’t help the argument.
But its not worth losing sleep over what the EU will do. For 30 years people have said the finance industry is about to collapse.
Let me tell you, the finance industry has very little to do with tax. The wealthy businessman in Hong Kong who has built up a £100m empire doesn’t care about tax. What he cares about is the fact that his four children don’t get on and two of them have married people he doesn’t like. So he uses a Jersey trust to ensure his grandchildren are well provided for. Tax doesn’t come into it.
Same with investment funds – no tax angle at all. Investors pay tax on their investment but want to avoid double tax (i.e. the fund being taxed and then the investor being taxed).
But people need to be aware that there is no alternative to finance for Jersey. Without finance, we end up like all of Europe’s other islands – poor and with no jobs for the young. We would be dependent upon widening the 11(k) tax base and would become full of old retirees in large houses and unskilled cleaners and gardeners looking after them.
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He was the actor and Jersey provided the stage on which he stands, the simple facts are that this island does an unpopular diservice to the UK and over time it will be cut down to size.
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‘But it doesn’t mater – all you need to know about how vital Jersey is to the UK’s wellbeing is clear from the fact that even a Labour government looking at a landslide defeat won’t close us down. Because without offshore capital flows globally would diminish and we’d all be much poorer.’
An alternative explanation is that the UK receives a net benefit from the islands but will act to prevent real abuse of the tax system.
The last time this happened on a large scale was when the Conservative government in the early eighties changed the rules and shut down the Jersey gilt funds in a few months.
If the finance industry in the island collapsed it would leave the UK with a sizeable headache, small dependency depopulating at a rate of knots with large budget deficits.
One of the benefits is that it would end the sad bleating about a small island nation as the Chief Minister headed off to Westminister with the begging bowl in hand!
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Adrian 72
Did you read my example 59? You can do legitimate things to avoid paying tax NOW and choose to pay it next year or the year after or in five years time – but you do pay it.
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‘But people need to be aware that there is no alternative to finance for Jersey. Without finance, we end up like all of Europe’s other islands – poor and with no jobs for the young. We would be dependent upon widening the 11(k) tax base and would become full of old retirees in large houses and unskilled cleaners and gardeners looking after them.’
Another example of the self delusion that seems to dominate Jersey politics.
The fact is that the 11(K)’s pay less than £10M in tax between the lot of them.
Even if the whole island was covered with mansion type dwellings with large gardens they would not pay a substantial fraction of the running costs of the island.
I predict that the finance industry in the island will decline in the long term due to the growth of other larger and cheaper alternatives.
Jersey has a boutique industry, it will be interesting to see how it competes with the big firms in an era of globalisation where some of them have bigger branch offices than the entire island’s legal profession put together.
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mad foetus
You embody the appalling mess we are in.
If the system was transparent many, many more people worldwide would get far, far richer.
You have no proof and you are spreading deliberate self-interested misinformation.
You couldn’t make it up. Oh. You do.
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62Debatable:By the term “Not very local” I was trying to convey that the person concerned was someone reciting a script he has put his own “ill informed” interpretation on.
By “ill informed” I mean he does not have a local person’s awareness of Jersey’s relationship with the UK, and was exhibiting the type of interpretation of that relationship gleaned from television programs such as “Bergerac” (BBC again)where fictional characters such as “Charlie Hungerford” gave everyone watching the impression that everything concerned with money in the Island was either dodgy,criminal or motivated by a desire to undermine the UK taxman!
In answer to your question I do not believe that a local person,properly trained, would feel obliged, or be able to adopt the “Mockney,chirpy chappie” approach exhibited in this program.(So obviously a 1980′s image apparent in the City of London and on Wall Street in that era and portrayed as a stereotype in numerous films since,most famously by Michael Douglas!)
Neither do I believe that “Local people” (And I include those who “know this Island well” in that definition) on the Island are so “Awed” by people with money that they would feel the need to exhibit such fawning characteristics as were displayed in this program by this individual and I very much doubt, and this is not his fault, that the person concerned has a childhood or even teenage background in this Island.
Local people have spent their lives surrounded by people with money at all levels,and if they do not in fact have money themselves,they do not see themselves as any less important or valued for the lack of it!And that is why as an Island we are successful in attracting wealthy individuals as residents.
65.In Cider Trading I think if you read my previous post again you will see we are broadly in agreement.
The fact remains however regardless of the standard of presentation which I think we both agree was pretty poor (So poor in fact that if I was a member of Lloyds Bank Inspectorate investigating this affair I would be looking at the financing of that new Porsche fairly closely to discount incentive from the picture)the fact remains that the individual did in fact state in amongst all the flannel that the onus is on the customer to deal with their own tax affairs and that it is not the Bank’s responsibility!
Which is in fact and in law the case!
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mad foetus 76
I’m simply amazed at your comments! Do you really “WORK” in the finance industry, or do you just work in an office that deals with finance?
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I hope that I am not the only one who smells a rat here. Either that or I should be wearing a “tin foil hat” by becoming a cynical conspiracy theorist
The BBC is protected by the UK Government. Call it what you like but that is how it is.
The UK Government is looking into how Jersey operates at a high level with their review of Crown Dependencies.
We have serious, and quite vocal, squabbling over historical child abuse cases.
Certain echelons of Jersey society are advocating for independence.
So is it just me that finds it “convenient” that the BBC now attempts an expose of the Jersey finance industry that keeps our Rock afloat?
Before you take your enemy down you smear them with as much effluent that can stick; thus losing any public sympathy, and any support, that may have been garnered before.
Or do I just go and get my coat?
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I regularly listen to the Today programme on Radio 4 in the morning and the critical reception that government ministers and opposition spokesmen receive is a wonder to behold.
I wish that the local media were even half as critical when faced with one of our local politicians!
The BBC is nobody’s puppet, sometimes I agree with their output and sometimes I do not but I would rank their independence as been among the best in the world.
Hundreds of millions of people across the globe rank the BBC as the number one independent broadcaster, far above Voice of America, Fox News, etc!
If some of the posters on here read The Financial Times, a paper read on a regular basis by Warren Buffet and Barack Obama, they would realise that it has been far more critical of offshore finance than the BBC and is is probably more influential.
But doubtless they will dismiss it as yet another paper written by ‘pinkos’!
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Having been involved in a ‘Factual’ documentary about the place I worked some years ago, by a diffrent national TV channel. When the programmes were broadcast I didn’t recognise it, and I’d been there. Clips of film taken months apart were placed so as to be contemperanious, specific phrases were cut and pasted from diffrent parts of interviews, completly changing the context. This to was suppsosedly a hard hitting factual series carried out with the consent and co-operation of the operation.
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#76 mad foetus
Jersey is a tax haven. People put assets into trusts to avoid inheritance tax and capital gains tax. Investment funds, if structured correctly, allow investment income to be treated as a capital gain and taxed at 18 per cent rather than 40 or 50 per cent.
#80 Pip Clement: Re 1(1)(k)s paying less than £10m between them, can you tell me where this figure is from? As far as I am aware, no one knows how much 1(1)(k)s contribute to Jersey.
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I used to work for a BBC department…
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Pip,
I read the FT. What is clear, however, is that very few people understand the cause of the financial meltdown, which is surprising as it is straightforward. The first thing to note is that it has nothing to do with tax evasion or avoidance.
The cause of the problem was poor people in the US (mainly black – its a political issue this) buying houses they could not afford with mortgages they could never hope to repay. It was partly their fault.
The politicians (Bush in this case, but Blair and Brown were the same) encouraged it all.
A number of US banks aggressively gave bonuses to people based on the amount of money they lent out. This was absolutely daft – a mortgage creates an immediate loss for a bank – it is only profitable if it is repaid. They were to blame to.
Then those banks sold on their mortgage books to other banks, so the first banks could start lending more money. This is where offshore comes in as the mortgages were often repackaged through an offshore vehicle. But the notes issued were valued by rating agencies who all said it was pukka.
Banks then bought and sold these notes. They did so largely on the basis that they were buying modest but dependable returns. All this stuff about wild speculation is totally wrong.
What went wrong is that there was a housing boom fuelled by easy credit that the politicians encouraged. Some banks (the ones in the US and Northern Rock) lent irresponsibly. The others relied on rating agencies in buying low risk instruments that turned out to be high risk.
But please, let’s stop blaming offshore, hedge funds, ultra high net worth individuals etc.
Governments and poor people buying homes and cowboy banks that funded it. That’s who messed up.
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Michael Neal,
While you are not wrong, tax is less than half the story. I know of several trusts in Jersey, holding assets of over $500m each, which have nothing to do with tax. They are established by non-Europeans to preserve family wealth over generations in a way that minimises family conflict.
And as for funds…if a person invests in a company (X) which invests in other companies (Y,Z), then why should X pay tax? Y already pays tax and Z makes a loss. As long as the shareholder declares it why should the intermediary vehicle be taxed? And why would it be taxed to income rather than capital if it is a one-off gain?
I am just saying that it’s a bit like a pub. You can use the pub as an vehicle to get blind drunk before having a fight. Or you can use it as part of a pleasant night out. Just because it can be abused doesn’t mean it usually is.
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‘#80 Pip Clement: Re 1(1)(k)s paying less than £10m between them, can you tell me where this figure is from? As far as I am aware, no one knows how much 1(1)(k)s contribute to Jersey.’
Some time ago there was a debate in the States on the tax deals that 1.1(K)’s negotiate on an individual basis.
Terry le Sueur said that it would be immoral and probably impossible for us to renege on these deals.
During this debate the total tax contribution of the 1.1(K)’s was stated to be ca £8M.
Find the relevant story in the Evening Post, it was reported, and then reference back to Hansard on the States Assembly website.
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Mad Foetus, your putting the blame on ‘poor people’ is somewhat bizarre.
These people would have been approved for mortgages by ‘experts’. Those experts would have been banks who told them, after assessing their income, that they could afford the outgoing of their mortgage.
Some of these people will not have been particularly well-educated and will have trusted their banker as they would a doctor (I know, it’s stupid to trust a banker but some do).
There was a day when banks were sensible and only gave you a mortgage up to twice your joint income. THIS was sensible. However, banks now allow people mortgages up to 5-times their joint income, and even this is often not enough to purchase a basic home.
BUT, and this is the major issue, if you cannot afford a mortgage then you cannot afford rent! It is cheaper to have a mortgage than to rent. So what do you propose people do Mad Foetus, live on the streets?
It must be nice to live in some world where you can afford a lovely, comfortable life but you completely forget that many people are not in this position and they chose the cheapest option (a mortgage) because their idiot bank (the ‘expers’ remember), full of their arrogance and stupidity, assessed their finances and assured them they could afford it.
I am happy to accept that there are those who will have overstretched themselves to ‘keep up with the Joneses’ and I have little time for people like that, but anyone who doesn’t think the bankers are ultimately to blame for the scenario the world now finds itself in has their head stuck in the sand and is simply kidding themself.
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Mad Foetus seems to be happily ignoring the fact that the American NINJA mortgages were sold at an initial ‘teaser’ rate.
For the first year or so the interest rate was around a laughable 1-2%.
The loans were then wrapped up in to a CDO based on the repayment performance on the ‘teaser’ rate.
Obviously the repayment rate was high so the consequent bond got a good credit rating.
Then when the ‘teaser’ rate ran out and the borrowers had to repay the loan at 5 -6% interest the defaults started kicking in and the toxic debt started piling up.
There is a bit more to reading The Financial Times than a quick look at the Lex column!
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Leah,
I don’t say the people selling the mortgages weren’t to blame. But they were not bankers in the way you and I think of bankers. They were commission based mortgage salesman in a very specific and narrow sector of financial services. They were not experts, they were market traders, no better or worse than estate agents.
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debatable
I wasn’t just talking about Jersey I was talking about the trillions put through all legitimate Off shores which London use to facilitate their business. Private banking is far more profitable than retail banking and even the tax justice network agree that London is heavily connected to off-shores on an industrial scale. It’s not just finance that will be affected, it’s all those businesses who live off finance related businesses that will be hit too – just like here should the finance industry dry up – but on a much bigger scale.
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In response to the claims that the employee in the programme could be an actor, I do know the man involved and know him to be an employee of LloydsTSB who has worked in Jersey for some years. The programme was heavily edited to make him appear in as bad a light as possible and although I don’t condone what he did I do believe he was giving the bogus investor the same sort of advice he would receive in many banks in Jersey.
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“The cause of the problem was poor people in the US (mainly black – its a political issue this) buying houses they could not afford with mortgages they could never hope to repay. It was partly their fault.”
Quality comment. It would be funny if it wasn’t quite so offensive. Those poor black people up to no good again eh? Tut, tut.
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mad foetus, the blacks (as you say) and the poor are not the reason for the global economic crisis. It is the greed of people such as yourself who would sell their own mother who got us into this mess.
You epitomise everything that is wrong with the finance industry in this Island
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As always, there is a the usual load of unhinged bluster from those of you who think that the finance industry is inherently evil and anyone who works in it should be put against the wall and shot when the revolution comes.
You need to be objective here, and not confuse the misguided actions of the view with the professionalism and conservatism of the rest – unlike the boys at Panorama.
I don’t think even the Lloyds guy’s best friend would say that he did a good job on that interview – you just can’t advise a client to play hide and go seek with his tax reporting obligations.
Turning a Nelsonian blind eye is bad enough, but giving the bloke a nudge, nudge, wink, wink was reckless at best, potentially worse.
And I’m sure that there are a fair few others out there who would have made the same error of judgement – with or without the promise of a pat on the back and a bonus cheque from the higher-ups.
But on balance, the standards of compliance in this area in Jersey (and Guernsey for that matter), in my experience, are high. After all, who wants to lose their job, their licence or their liberty (or all 3) for helping a client commit an offence under the all crimes law? No-one, not even in Jersey, is paid enough for that.
Stop using this half-hearted attempt at journalism as yet another excuse to jump on the anti-finance industry bandwagon.
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The people selling the mortgages may not have been top drawer bankers but the boys and girls at Lehman et al who were slicing and dicing this fiscal offal to make it in to CDO’s that could gain a AA credit rating from S&P were out of the very top rack at the hottest business schools in the States.
I doubt that there are any of that calibre in Jersey!
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Mad foetus so who the hell thought up these schemes then? Even more pertinent why did the relevant authorities not see anything wrong with them? I knew they wouldn’t work when I read about them, soon after they first came out. I actually thought it was an April Fool’s joke at first.
Why were these subprime loans then allowed to be diced up and mixed in with the good debt and then allowed to be sold on to other banks and financial institutions without any questions being asked?
If this is the way that the financial markets run and are allowed to run it is no surprise when the lot comes tumbling down is it? How can subprime be seen as good in financial terms? How come people got sucked in to this scheme?
The worst of it is that the tax payer is getting turned over to bale these failed businesses out. So much for capitalism’s main mantra of survival of the fittest then. Why should the tax payer have to bale out failed businesses? The simple answer is that they shouldn’t, however in my opinion governments got in such a panic that they did the only thing they could think of to avert an economic disaster, that is make up the rules to suit and start printing new money out of thin air to cover the debt.
Quantitive Easing the newest buzz word on the block. A panacea for all ills guarenteed to solve any problem, or thats what the people in charge are trying to convince everyone at the moment. How can printing new money solve the problem of bad financial management? I must admit I am surprised people have fallen for this ploy, but I suppose people are desperate for things to return to some sort of normality and can’t contemplate the reality that the system has failed big style.
I also like your comments about Jersey being used by parents to cut out their childrens’ unliked “outlaws” from their inheritance as opposed to tax avoidance.
Mad foetus “The cause of the problem was poor people in the US (mainly black – its a political issue this) buying houses they could not afford with mortgages they could never hope to repay. It was partly their fault.”
Very interesting, your right wing views are coming to the fore aren’t they?
Mad foetus “They were commission based mortgage salesman in a very specific and narrow sector of financial services. They were not experts, they were market traders, no better or worse than estate agents.”
So let us get this right someone was selling a product they didn’t have a clue about? Is this the way to run, or do business? These people failed in their duty of care to their clients as far as I am concerned and to put the icing on the cake they put a big spanner in capitalism’s wheels. The end result has been many losing their homes and still more around the world losing their jobs through no fault of their own.
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#90 mad foetus
Agree re trusts.
Re funds, the usual reason is that companies Y and Z pay tax in a different jurisdiction to the UK. Also, most funds receive income as dividends that are rolled up in the fund, thereby increasing its value. The shares/units forming the fund consequently increase in value and while strictly speaking any profit on the sale of the shares/units is a gain as you rightly say, it is a gain that has been created purely by rolling up income. The substance of the transaction means that it should therefore arguably be taxed as income.
Quite agree with your final paragraph – great analogy!
#91 Pip Clement
I’ve searched thisisjersey.com. Any idea when the debate was? I’d be interested to look it up.
Love the phrase ‘fiscal offal’ by the way. I will be stealing that!
#100 Adrian
Agreed, particularly about quantitative easing, which may be the main cause of the current stock market bubble.
Re bailing out banks, unfortunately it had to be done. If a UK high street bank had gone under, the liquidity of the companies it served would have disappeared overnight leading to cashflow crises and hundreds of thousands of insolvencies.
Since these companies would not have been able to pay their creditors, the contagion would have spread and the whole of the UK would have ground to a halt. There would have been riots and marshal law. Deeply unfair though it was, it was the right decision.
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Adrian,
The point is that the people who are to blame are largely the central bankers and politicians who encouraged a huge expansion in credit on the basis that they would get re-elected as long as people had the feel good factor as their house prices rose.
The real oil on the fire was US mortgage salesman on commission granting mortgages that could never be repaid.
However, all the guff about bankers’ greed misses the fundamental point that the people who were slicing and dicing and then buying subprime THOUGHT they were reducing risk. This was on the basis of flawed calculations from rating agencies. It was not greed that motivated everything but a flawed model.
It has nothing to do with right wing views: the crux is that all of this happened not because bankers are evil and greedy but because a system that was designed to reduce risk ended up amplifying risk.
And also, hardly any of it was to do with offshore. The real problem, as you have picked up, is that mortgages were being sold by salesman in the US: lending is generally not a regulated business, on the basis that if you lend unwisely, it is you that suffer. That turned out not to be the case. But the fact that unregulated businesses turned out to be run by cowboys does not justify blaming regulated businesses for the chaos that ensued.
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the island authorities playing shoot the messenger… again!
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Poor old Mr. Jones – he was only doing his job. He is not like some Dick Dastardly character stealing and caniving taxes from the UK. Lloyds TSB has to answer many questions here, lets not shoot the messenger.
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No 37 In Cider Trading.
Yours is by far the best post within this thread by a country mile. Extremely well put.
Guys, the UK has Jersey in it’s cross-hairs. The signs are all over the place. Get your heads out of the sand and start planning your futures NOW, because this place is going to change beyond all recognition.
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Pure naked greed ran through the whole process.
From the commision driven salesmen flogging flawed mortgages to people who could not afford them, through the Wall Street high flyers and their firms who made billions in profits and bonuses as they happily sliced and packed loans that were almost certain to default and turned them into AAA CDO’s, to the blinkered advisors and investors who bought a supposed AAA stock that returned a lot more in interest than government securities, top notch corporate debt or anything else in its class.
There are trillions of dollars of this garbage washing round the world’s financial system and it will probably cripple economic growth for a decade or more.
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Mr Clement (100) now you really have annoyed me with your comments about the caliber of bank staff here in Jersey and the UK as opposed to the products of American Business Schools!
Let me tell you that two thirds of the cause of this financial crisis is due to the fact that when Mrs Thatcher was in power politicians egged on by computer illiterate senior management “Bankers” in the UK were so in awe of the American Banking system and the people at the top of that industry there that they threw the UK rule book in the shredder!(Deregulation)
This was due to the fact that the Americans were not prepared to accept that the City of London trained “Bankers” might just have learnt a thing or two as they had several centuries more experience of banking and it’s pitfalls! They choose to ignore the Laws that had been built up over centuries of banking precedent because as usual they wanted results yesterday or preferably the day before,and the whole attitude suddenly became a cross between Los Vegas and a bad Hollywood film!
The Customer became a “Client” and a prime candidate to be ripped off!Any objection the “Client” might raise would be directed back at them or referred to some completely useless and powerless complaints bureau posing as some sort of regulator!
I will give you an example of one of those “Bright Sparks” from an American business school I had to deal with at the time who “Worked?” for Beare Stern, who I used to have to deal bonds with, who was so out of his head on cocaine that he used to go to sleep halfway through a dealing conversation, and ring up in the middle of the night because he couldn’t get his head round time differences!
Then there was the time keeping which started with early morning breakfast meetings and ended with no one going home because it was policy of the American in charge to always arrive earlier than his staff!
What people forget is that America is a comparatively young country and the whole attitude was “Our system is the greatest so we don’t need to learn yours” even if you have several centuries more experience of International Finance.
In fact the American Banking system was not that sophisticated as is now being proved, and the whole wizzbang approach was inherited from it. Short-term profit is King there and if you are not waving your arms about, shouting everybody down and generally giving out a macho image then you are implying that the person trying to talk sense is in someway lacking in brains or confused by technology!
There is no such thing as a social aspect to the American banking system, and we capitulated to it and adopted it because of the computer. From then on it was make the “Client” conform to our machine, not the other way round!
Also, and this is not greatly appreciated, under the law suddenly the money you put in the Bank became the Bank’s, not yours.
At that point as a profession, “Banking” was lost to Mr 10% and his pet accountant and it is the tax payer in both nations who is now having to clear up the progressive mess these so called “Bright Sparks” have created.
At one point, it has been admitted, alot of the complex computer programming for this nonsense was being written by former NASA employees with absolutely no banking experience at all!
Unfortunately, you cannot produce a “Banker” in a University environment anymore than you can produce a competent airline pilot without teaching him or her the basics by getting the individual to actually learn to fly a basic airplane!
Unfortunately, for those who believe banking is a product driven industry open to standardization, an individual’s financial profile is as unique as a medical record, and therefore indiscriminate use of the computer has had the effect of disenfranchising whole sections of the community who don’t fit the standard average client profile.To make matters worse, no one is updating that standard average client profile to take into account we have moved from an age of jobs for life into an age of many jobs for your working life if at all, and with an ageing but active population the main financial profile is now moving away from salaries and weekly pay to investment and fixed income. No wonder the “Computer says no!” joke has become a reality!
It is a sad fact that Banking is now in the hands of those who would rather blame the “Client” than adjust the computer to accommodate his or her individual profile!
In short no matter how much money politicians throw at this current downturn what you will end up with is a system still run for the few by the few, as in America, where the ratio of super wealthy to the rest of the population is at a socially unacceptable level and will undoubtedly lead to discontent and revolution if it is not addressed.
Why we have seen fit to set our economic system back several centuries to imitate that of a younger country and thus open ourselves up to repeating history of social unrest we have already experienced, I do not know?
But Mr Clement there are people in this Island who started in banking at the bottom and worked their way up through the system, and who do have the customer experience but are constrained from using it, sadly they are a dying breed.
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all good things
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