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Statement on abusive tax schemes

29 July 2014

On 21 June 2012, the Chief Minister, Senator Ian Gorst, issued a statement clarifying that Jersey has no wish, or need, to engage with those who seek to involve the Island in aggressive tax planning schemes to avoid UK tax. Today, Senator Gorst and the Treasury Minister, Senator Philip Ozouf, have jointly issued the following statement:

“We support fair tax competition, and view legitimate tax planning as an appropriate response to operating cross-border. We do not support that which goes beyond legitimate tax planning for commercial purposes nor do we want our service providers to host abusive tax schemes designed to frustrate the will of national parliaments.

“The UK has recently committed to introducing new measures to deal with tax advisers who sell contrived and abusive tax avoidance schemes, with the aim of deterring and preventing such schemes. This includes the new High Risk Promoter Scheme and enhancements to their existing Disclosure of Tax Avoidance Scheme (DOTAS) including accelerated payments.

“Although it is for the UK Parliament to determine the extent to which UK residents are able to engage in lawful tax avoidance, given that Jersey does not wish to be associated with abusive tax schemes and in the spirit of being a good neighbour, we want to support the UK in achieving their ambitions in relation to that which we consider to be unacceptable.

“In parallel with the work the UK has been undertaking, we have been working with industry and the Jersey Financial Services Commission (JFSC) to put in place a package of measures that will embed and reinforce the policy position that Jersey does not welcome abusive tax planning structures. These measures will also provide a framework allowing action to be taken by Government under Jersey’s business licensing regime against those who use the jurisdiction to facilitate abusive tax schemes targeted at UK residents.

“With effect from 1st of October 2014, we expect service providers to ensure that they identify if any new business they take on will facilitate the use by their client of a tax avoidance scheme registered under DOTAS, or are of the view that they are involved in a transaction which forms part of a scheme which has a DOTAS reference number, and document this accordingly (including confirmation of compliance with DOTAS reporting requirements) as part of their business take-on procedures. We are pleased the JFSC will monitor this as part of its assessment of service providers’ compliance with the regulatory requirement to organise and control their affairs effectively and to maintain adequate risk management systems. Jersey Finance will also be consulting members in relation to a proposed issuance of guidance notes expanding on the principles advocated here in relation to abusive tax schemes and we encourage all members to engage with this. To assist in the effective implementation of these actions we have been working with HMRC to ensure providers do not contravene HMRC’s DOTAS rules and to consider what information would be of assistance in identifying and responding to abusive tax planning schemes with which Jersey may have some involvement. Jersey will work closely with HMRC going forward to identify ways in which we can better collaborate with them on tax information exchange on complex international tax avoidance and structures.

“Jersey has already signed an automatic information exchange agreement with the UK and this will allow the UK authorities access to all reportable information in relation to their taxpayers, thus allowing them to take any actions they consider necessary in respect of historic tax schemes they conclude are abusive.

“Jersey is also one of more than 40 countries to commit to early adoption of the OECD Common Reporting Standard on automatic exchange of information as a global standard, underlining our commitment to transparency and further evidencing our firm political commitment to fully comply with all relevant international standards.”

Chief Minister's 2012 statement on abusive tax planning

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