Government Prepares Offshore Bank Account Tax

[bluemonday]

Clicky

[Jack Meoff]

They still seem to be forgetting it was the UK Governments fault the IOM branch crashed....

[Tempus Fugit]

reading that article, I get the impression that Brown's gang are in such a mess that they are chasing anything they can get their hands on, it makes you wonder why anyone bothers working over there as such a high proportion is grabbed by the tax man. I expect to see a huge upheaval at the next general election after the mess they are making of trying to dig themselves out of the hole they are in, and the remedies they come up with are a bodge or sticking plaster rather than fix the clangers they dropped (like the 10% band)

 

I don't understand what "but not Luxembourg" has got to do with the UK government, either the reporter has got her knicks in a twist or the Luxemburgers should tell them where to stick their enquiry if they start poking their noses in

[manshimajin]

I am puzzled:

Alistair Darling has stood firm against the compensation calls, but has hinted that change may be afoot. He said: “The recent financial turbulence has highlighted potential problems with overseas territories and crown dependencies, such as the Isle of Man and Channel Islands. They attract banking customers with lower taxes, without contributing to the UK Exchequer. The British taxpayer cannot be expected to be the guarantor of last resort. But at times of stress, depositors need to know who will compensate them.”

How does this statement fit in with the EU Savings Directive? Under this arrangement people who bank in the IOM who are UK resident either have 20% witholding tax deducted from their accounts (increasing to 35% from 2011) which is paid to the UK Treasury or they have to opt to have their personal information and savings income reported to the UK tax authorities. A flow-chart explaining the procedure is at:

 

EU Savings Directive

 

If one turns round what Alistair Darling is saying does this mean that non-resident savers with IOM Banks who have since 2005 been paying witholding tax to the UK tax authorities (ie in AD's terms 'contributing to the UK Exchequer') should benefit from the UK guarantor of last resort arrangements? I understand that banks on the IOM have ensured that clients with non-resident accounts complete the EU Savings Directive forms and either pay tax or have their information exchanged with the relevant EU tax authorities.

 

Is he saying that he would like to help the IOM government by guaranteeing IOM bank accounts as long as they pay some form of deposit tax to the UK over and above the witholding tax that the UK Treasury receives from the IOM?

 

If EU clients of IOM have no connection with the UK why would they expect or want the UK Government to guarantee their savings? They are already paying witholding tax to their home country. If they want guarantees they would deposit their funds with their home country banks.

 

Either I am missing something or Darling, to quote that FT letter, is on a different planet to everyone else.