A problem with the playing field

This is because Fatca is shorthand for a treaty which would give the US Internal Revenue Service access to full information about bank accounts held here by US citizens. Perhaps surprisingly, our authorities are eager to sign the treaty – in part because it is intended to be an international measure which will extend to our competitors in the financial services sector.

But trouble arose when the UK said that it would not consent to our being party to Fatca unless a similar arrangement were agreed between the Island and Her Majesty’s Revenue and Customs.

Some might say: ‘Fair enough – what’s good enough for the IRS should be good enough for HMRC’. This, however, would be to ignore a vital feature of the UK’s demand, the lack of a level playing field. The UK authorities appear to have no interest in an international treaty mirroring Fatca. On the contrary, they are targeting only the Crown Dependencies.

Quite rightly, our authorities are resisting the UK’s demand, though they remain eager to sign the wide-ranging US treaty. In addition, the point has been made, by Treasury Minister Philip Ozouf among others, that Jersey has no interest in being involved in tax evasion and is entirely willing to co-operate with disclosure rules that are applied internationally.

Talks on this issue have begun, which is perhaps why Chief Minister Ian Gorst has been so very reluctant to comment meaningfully on the matter. But the Isle of Man has already acquiesced to the UK’s wishes, which sets an unfortunate precedent.

It remains to be seen how enthusiastically the UK is prepared to press its case, but we hold at least one card that might trump any desire to act against us unilaterally. This is the collateral damage that would be done to the interests of the City in the event of the imposition of any agreement that would put the Island at a disadvantage compared with its many competitors.