As reported, the programme focussed on two top officials at HM Revenue & Customs that it said have links to companies that have sought to use offshore structures to avoid UK tax, or which advised clients as to how they could avoid paying stamp on expensive UK properties.
In a statement, Guernsey Finance chief executive Fiona Le Poidevin mainly addressed the fact, highlighted in the programme, that FTSE 100-listed, Friends Life-owning Resolution is technically incorporated in Guernsey. This, the Dispatches narrator said, was to avoid higher UK corporate tax rates.
“This investment model actually contributes positively to the global, and indeed, UK economy,” Le Poidevin said in a statement issued less than an hour after the half-hour Dispatches programme, which aired in the UK on Channel 4, ended last night.
“This is not always fully understood, and so we in Guernsey must make sure we are heard, to ensure everyone is working towards the same long term interests.”
Le Poidevin, who took over as chief executive on 1 July, noted that the Dispatches programme was the latest in a series of recent articles and programmes in the UK media that have looked at the Channel Islands, although the previous coverage focused primarily on “historical, tax-driven schemes relating to individuals”.
She did not address the size of the HMRC official’s alleged remuneration for his directorship with Resolution, nor what the programme’s makers apparently thought was the irony of an HMRC official having ties to a “tax haven”-based company.
“The Dispatches programme did refer to the fact that an HMRC official receives remuneration from a Guernsey-based company, but what is crucial is the location of the person and not the company,” Le Poidevin said.
“So assuming he is a UK resident and domiciled individual, then he would be subject to UK tax on his worldwide income, including such remuneration.”
She continued: “The Dispatches programme was principally concerned with what is a well recognised and widely used set of corporate arrangements, where both investors and the underlying portfolio of trading companies may be based in the UK.
“In essence, an investment vehicle is established in Guernsey, it attracts investment from insurance companies, pension funds and maybe even wealthy individuals, and the Guernsey vehicle then purchases a portfolio of underlying assets in the form of (often struggling) trading companies.
"Guernsey is chosen because our laws and regulations meet leading international standards, we have experience and expertise in establishing, administering and managing the structures – yes, these are not just ‘brass plate’ operations – and we offer quick and easy access to the London and European capital markets.
“In these circumstances, tax is not the reason why the business comes to Guernsey.
“Indeed, each of the trading companies within the portfolio will have profits subject to the tax treatment of the jurisdiction where they are based, and all of the investors will be subject to tax on their income as appropriate in their country of residence.
“Having the investment vehicle in the structure based in Guernsey simply means that tax is not due twice on the same profits or dividends.
“The UK itself is now looking to introduce tax transparent vehicles to help avoid these types of situations.
“Using such a structure ensures that the tax treatment for the investors is the same as that for someone investing directly into a trading company. However, the use of such investment vehicles allows investors to spread their risk and they can also take comfort that their investment is being managed by someone with the necessary expertise in the sector.
“This only serves to encourage investment, which is particularly important at a time when credit is tight.”
The Dispatches show, Secrets of the Taxman, may be viewed by clicking here.
