Until the statements were issued, beginning around 5pm London time, the fact that such a meeting was being planned had been confirmed, but it was not known when or where it would take place.
However, representatives from most of the UK overseas territories are expected to converge in London over the next few days for the British Overseas Territories Joint Ministerial Council, at which tax matters are almost certain to be discussed.
Cayman Islands premier McKeeva Bush is reported to have set out for London on Wednesday, while Gibraltar chief minister Fabian Picardo and deputy chief minister Dr Joseph Garcia were flying in over the weekend, according to a statement on the Gibraltar government’s website.
As reported, news that the UK government was contemplating a ‘son of FATCA’ aimed at obtaining information on all accounts held by British taxpayers in Britain’s overseas territories, including the Crown Dependencies, Gibraltar and the Cayman Islands, emerged in a report last Friday in International Tax Review (ITR)
ITR, which coined the phrase ‘son of FATCA’ to describe the scheme, said it had seen a copy of a leaked draft of a government document detailing how it would work.
Formally known as the US Foreign Account Tax Compliance Act, FATCA was signed into law in 2010 by President Obama. It requires all foreign financial institutions to provide information to the US Internal Revenue Service on all American taxpayers’ overseas holdings, beginning mainly in 2014, although some reporting has already begun.
The joint statement issued this afternoon by Jersey chief minister Senator Ian Gorst and Guernsey Chief Minister Deputy Peter Harwood noted that “an explanatory meeting" had been held “with HM Treasury officials this week to understand better the UK proposals”, with further discussions “expected”. The details of the meeting, including exactly when it took place, were not given.
“The UK and the Crown Dependencies share a common commitment to combat tax evasion and to participate generally in international efforts to combat financial and other crime including fiscal crime,” the five-paragraph statement, which may be viewed by clicking here, concluded.
Isle of Man chief minister Allan Bell issued his own statement, which was longer, and which sought to set the concept of a ‘UK FATCA’ in context with recent and ongoing global moves towards greater information exchange.
Noting that he had “made reference” to a “move towards automatic exchange of information becoming the new global standard in international tax co-operation” in comments last month, Bell, who prior to becoming chief minister in 2011 had been the island’s treasurer for almost a decade, said this movement “involves the G20, the OECD, and the EU, as well as FATCA…and not surprisingly, we have been discussing the implications of all this with the UK and with our fellow Crown Dependencies in the Channel Islands".
"This week’s meeting of Crown Dependency and UK Treasury officers was part of the ongoing dialogue," Bell said.
‘I explained in October that FATCA requires automatic collection and sharing of tax-related information with the US authorities, and that it was likely that other nations would look for similar arrangements. I repeat now what I said last month: We need to respond to these changes, not simply because it has been our long-standing policy to meet established international standards, but because a failure to do so will damage our economy in the medium to long term.
“The Isle of Man has achieved global recognition for its compliance with current international standards of tax co-operation. The Island has never had bank secrecy laws and was one of the first countries outside the European Union to automatically share bank account information with EU member states.”
Son of FATCA ‘could drive business away’
Hours before the news of the meeting between the crown Dependencies and the UK, meanwhile, a Channel Islands news website published the comments of one of Guernsey’s best-known experts on tax, Ernst & Young partner Graham Parrott, who it quoted as saying that a ‘Son of FATCA’ regime could end up simply driving business away from British-linked offshore centres, including the Channel Islands.
“And if the reporting requirements are extended to UK-resident but non-domiciled individuals (non-doms), then that could have an even greater impact,” Parrott told the news website, businesslife.co.
“It would be ironic in that case that the affected businesses in the Crown Dependencies, or whichever places this is to apply to, would have to provide more information than the non-doms themselves are currently required to do.”
Parrott went on to note that because the new law would cover some of the same areas as the EU Savings Directive, which already requires that Guernsey and the Isle of Man share information on UK taxpayers with HM Revenue and Customs (HMRC), Jersey would have more to lose from a ‘Son of FATCA’ as it is understood to have been proposed than Guernsey.
This, Parrott told businesslife.co, is because Jersey has no automatic information exchange, so “the change in Jersey as far as this UK reporting is concerned would be greater”.
Perhaps most frustratingly for Channel Islanders, though, ‘Son of FATCA’ appears to be driven more by politics than by hard and fast data about how best to raise revenue, Parrott told business.co, adding that this is “exactly what happened around the removal of low-value consignment relief” – a recent UK crackdown on a “loophole” seen as undercutting UK businesses.
“While much of this business has gone elsewhere [from the Channel Islands since the change in the regulations], the clamour has died away,” Parrott said.
