Gordon Brown Writes To The Isle Of Man . . .

[nipper]

Is this letter in reply to the letter from the Isle of Man that was on the front page of the Examiner?

[Gladys]

Well, possibly, Nipper, I doubt it though. The thing to remember about these letters is that they are not little notes just dashed off, they will have been through a drafting committee involving several interests and will have done the rounds of Whitehall and been several days in the drafting. It is one thing to take the verbal from UKGov, but take with immense circumspection the written word.

 

That is why I am so narked at the knee jerk and lack of circumspection in MR.

 

I do speak with more than a little experience of dealing with UK central govt.

[Rog]

Take particular note of the reference to the phrase ‘Crown Dependencies’. That was not put in not once but five times in the letter, or put in so early in the letter, without then intention of sending a very important message and setting the scene.

 

Next the phrase ‘Recent developments have underlined the importance of embracing international standards on tax transparency.’

 

Not cooperation, not making available information when asked, the words used are ‘tax transparency’. Like the tax transparency that Mainland banks must employ by passing a/c details of all customers to the Inland Revenue as well as deducting tax at source.

 

In the next paragraph the reinforcement of being Crown Dependencies is made along with the message that the goal is not simp0ly meeting the basic criteria but being seamlessly ‘joined at the hip’ with the UK Inland Revenue as well as other national Revenue recovery functions.

 

In short, anyone with an a/c with an offshore tax haven will very soon find that the tax haven no longer exists as such since the tax haven must either work seamlessly with the Revenue recovery body of the country of which they or their company if appropriate is domicile or face VERY serious consequences. That is spelt out even more clearly in the paragraph containing the words

 

‘it will be vital to the interests of the Crown Dependencies that they can readily meet any new international standards which emerge’

 

As for ‘The Foot review and the Ministry of Justice will be able to provide support to the Crown Dependencies on these matters over the coming months’, that is a very thinly veiled threat since the word ‘support’ should not be taken as meaning help in the conventional meaning of the word.

 

In my opinion the letter, if genuine, is a classic example of tautology. It could have been condensed into something like ‘Your neck is in our noose, It’s game over. Cooperate or be made to’.

 

To read it any other way is just kidding yourselves.

[Albert Tatlock]

Take particular note of the reference to the phrase ‘Crown Dependencies’. That was not put in not once but five times in the letter, or put in so early in the letter, without then intention of sending a very important message and setting the scene.

 

Next the phrase ‘Recent developments have underlined the importance of embracing international standards on tax transparency.’

 

Not cooperation, not making available information when asked, the words used are ‘tax transparency’. Like the tax transparency that Mainland banks must employ by passing a/c details of all customers to the Inland Revenue as well as deducting tax at source.

 

In the next paragraph the reinforcement of being Crown Dependencies is made along with the message that the goal is not simp0ly meeting the basic criteria but being seamlessly ‘joined at the hip’ with the UK Inland Revenue as well as other national Revenue recovery functions.

 

In short, anyone with an a/c with an offshore tax haven will very soon find that the tax haven no longer exists as such since the tax haven must either work seamlessly with the Revenue recovery body of the country of which they or their company if appropriate is domicile or face VERY serious consequences. That is spelt out even more clearly in the paragraph containing the words

 

‘it will be vital to the interests of the Crown Dependencies that they can readily meet any new international standards which emerge’

 

As for ‘The Foot review and the Ministry of Justice will be able to provide support to the Crown Dependencies on these matters over the coming months’, that is a very thinly veiled threat since the word ‘support’ should not be taken as meaning help in the conventional meaning of the word.

 

In my opinion the letter, if genuine, is a classic example of tautology. It could have been condensed into something like ‘Your neck is in our noose, It’s game over. Cooperate or be made to’.

 

To read it any other way is just kidding yourselves.

I just read that and thought 'Tosser - with grudges'.

 

To read it any other way is just kidding myself.

[Politician]

Sadly, I cannot share the general opinion that the letter is rather innocuous. What is worrying is not so much its content as its context - Gordon Brown leaked the letter in advance to the far-left, anti-tax haven pressure groups the Tax Justice Network and Tax Research UK. Indeed, it was Richard Murphy of the latter who informed the Guernsey government, six days in advance of the letter being dated and sent, that they would be receiving such a communiqué.

 

You can read John Christensen's analysis of the letter (written in his customary understated, if inevitably biased, style) here:

 

http://taxjustice.blogspot.com/

 

Meanwhile, Richard Murphy's analysis (actually a borderline rant, as is his custom - try reading it aloud in the manner of an Austin Powers villain) is here:

 

http://www.taxresearch.org.uk/Blog/2009/04...y-will-be-over/

 

Even allowing for a little spin on the part of Christensen and for Murphy's inevitable self-aggrandisement, I have a nasty feeling their relationship with the Prime Minister's office may mean their interpretations are not too far from the truth.

 

If so, the Isle of Man needs to begin putting in place its exit plan now, as we would be far safer negotiating our relationship directly with objective bodies such as the OECD, G20 and EU, rather than relying on the goodwill of a failed politician backed into a corner and looking for any scapegoat to blame for his own mismanagement of his country's economy. Otherwise, it could simply be a question of which of three scenarios comes to pass first:

 

1 Gordon Brown irreparably damages confidence in our financial services industry

2 We manage to sever constitutional ties with the United Kingdom

3 Gordon Brown loses the next election

[Gladys]

Yes, we have to take the letter seriously, you wouldn't ignore a letter from the British PM would you? But it is apparent that the terms of the BVI letter were very different to that to Jersey, so what were the terms of the letter to us? I do read into it the veiled threat, but the reference to putting clearwater between us (well, Jersey in the letter we have seen) and the rest of the less co-operative jurisdictions indicates where Gordon wants to go.

 

The letter isn't innocuous, the UK PM isn't in the habit of dropping little notes to people; it means something. I agree with Politican, however, that an exit strategy should be being formulated.

[hboy]

Meanwhile, Richard Murphy's analysis (actually a borderline rant, as is his custom - try reading it aloud in the manner of an Austin Powers villain) is here:

 

http://www.taxresearch.org.uk/Blog/2009/04...y-will-be-over/

 

Yes, Mr Murphy and his tax jaundice network seem to be coming increasingly more influential in the eyes of Gordon Brown. Even the style of his blog has changed to being more like a news service. The bombastic little twat.

[pongo]

Sadly, I cannot share the general opinion that the letter is rather innocuous. What is worrying is not so much its content as its context - Gordon Brown leaked the letter in advance to the far-left, anti-tax haven pressure groups ...

 

Normally only the nutty right and conspiracy theorists describe anything as 'far left' which is a worn out 1980s description which typically comes attached to an agenda.

 

Some of what the anti - tax haven people have been saying for years has been listened to internationally and has been accepted as reasonable. They are part of the debate. And the IOM has been saying for a decade that it does not want to be a tax haven or seen as such. All the roads are leading in the same direction. In the long run that will be good for the IOM. I really wish that people would stop trying to stir things up.

 

ETA: this talk of an "exit strategy" is rubbish. The IOM is not economically sustainable on its own. It would be a disaster. We would end up like Cuba or Iceland or worse and run by taxi drivers.

[Gladys]

Having an exit strategy is not rubbish, what it means is continuing economic diversity. But IOM Gov should be thinking about what would happen if in the budget Alistair decided that ANY kind of tax planning was illegal, say. Unlikely, but who knows and that is the contingency that our politicians should be considering.

[pongo]

Having an exit strategy is not rubbish, what it means is continuing economic diversity. But IOM Gov should be thinking about what would happen if in the budget Alistair decided that ANY kind of tax planning was illegal, say. Unlikely, but who knows and that is the contingency that our politicians should be considering.

 

OK - in that sense I see what you mean. I thought you were suggesting some sort of UDI style 'exit'.

 

There will be people who will suggest that. But it would be a disaster. We would end up being run by the worst sort of little Englanders. The best way forward for the IOM is to join in more - not less. And to find ways of ending the over dependence on financial services and construction. That means developing export industry. That means being properly inside the EU.

[Politician]

ETA: this talk of an "exit strategy" is rubbish. The IOM is not economically sustainable on its own. It would be a disaster. We would end up like Cuba or Iceland or worse and run by taxi drivers.

The island does not have to stand alone. If we severed constitutional ties with the United Kingdom, we could enter the EU as a micronation. Given Gordon Brown's rather disturbing new bedfellows - "far-left" or not far-left as you prefer - I think we could be a lot better off in the long run.

[Albert Tatlock]

IMO, I think some people are getting a bit confused here between the G20 objectives and the objectives of the Foot Review.

 

We have met the G20 requirements and as such are now on the 'white list'. End of - for now, but probably nothing more will be heard from on that front for a good few years (>5).

 

The Foot review is about UK residents and taxation - not anything to do with the rest of the world - and how UK citizens pay tax and whether UK residents are using this place to evade paying tax in any way. It's really about how the TIEA will work in reality IMO to be able to turn that into a budget figure that Alistair Darling can add in and get a clap for. But it's also effectively a desperate trawl for money by the UK government, akin to looking under the cushions on the settee for a couple of quid, cos they are broke - and need to be seen to be doing something and blaming someone. My bet is that it will actually be much ado about nothing in the end, and will target a few individuals, raise only a little, and leave company activities pretty much alone. If they piss off too many companies, then companies will do a Shell and leave. I think the Foot review will end up targetting mostly those British (territories) that have yet to make the white list and blather on about the G20 international standards that need to be met - and we'll actually get a good mention. I also suspect any estimates on what the UK govt will get back 'because of this review' will be highly overexagerated.

 

Moreover, the UK Government has been clear that the foot review is nothing to do with constitutional arrangements, and will not affect our independence in fiscal matters and the setting of our own rates of taxation etc.

[Evil Goblin]

I would be very cautious about interpreting this letter as non-problematic. Remember that these things are written in the traditional "doublespeak" of diplomatese. Given that, the ending of the third paragraph is unusually blunt. i.e. Broon is very serious.

[Rog]

Politics is a funny – and a dirty – trade to be in.

 

For one thing there’s the matter of perspective of the electorate to consider and since tax evasion and tax havens are now well and truly in the public mind.

 

Any actions taken by politicians of either party to close down what is (rightly) seen as immorality on the part of individuals and big business who use what really is sharp practice in order to avoid paying what Joe Public HAS to pay political dividends quite apart from recovering lost revenue.

 

The days when tax havens such as the Isle of Man can be simply overlooked in the overall scheme of things have come to an end. There is huge public anger at how some people are ‘milking the system’ in various ways ad tax evasion even if by tax avoidance is right there in the top ten of things that cause offence.

 

If for no other reason than that the UK WILL pursue a policy to close down the opportunities for people and businesses to cheat the Revenue especially now as by so doing the perception is that such cheating be it legitimate or otherwise is making those who MUST pay the full tax (rightly) feel cheated.

 

And not just the UK government are now on the close down tax dodgers havens, the EU and the US as well are loaded for bear, and again if for no other reason than delivering the message that the cheating has to stop.

 

I have mixed feelings about this. On the one hand I really do regret the effect it will have on hundreds if not thousands of people who will have to leave their home as I did in order to get a decent life as the Isle of Man economy collapses. This time caused by the FS collapse rather than the collapse of Tourism as was the case in my day.

 

On the other hand I see the opportunity that is opening up for the Island, provided that ‘vested interests’ with well feathered nests don’t prevent things being done that will benefit the whole Island though to the discomfort to themselves and also the mind set that the present Tourist opportunities will prove adequate.

They will not.

 

It will be interesting to watch what will happen over the next five years or so. Certainly suggestions of severing ties with the Mainland are cloud cuckoo land thinking, as is the assumption that the Isle of Man could simply knock on the door of the EU and be welcomed with open arms.

 

The route into the EU is far more likely to involve the full integration into the UK, Tynwald being reduced to having the same responsibility of a town council, and (if lucky) a single seat in Westminster. In fact that may well prove to be the only viable option for the Island that will be open before long.

[Albert Tatlock]

The problem Garden Broon has in tackling tax avoidance v tax evasion is one of time. Tackling evasion has already been legislated for, tax avoidance has not and is perfectly legal. Broon has a year or so left until he has to face an election (on or before 3 June 2010) - do you really think he has any chance of achieving all this in that time? I suspect not, and given that NuShite has a snowball in hell's chance of being re-elected after this financial credit crunch debacle, it also does not have much chance of any rushed legislation getting the backing it needs (Lords to consider too). Labour are around 15 points behind the tories at present, and have been for several months now - Browns only hope is to improve the economy, but his results so far have been like putting petrol on a fire trying and put it out. A great many voters now also realise that Brown was actually a major instigator of many of the problems that have caused this crunch.

 

There is no black list anymore, the four countries who were on that have now agreed to gear up toward co-operation and have been moved onto the grey list. Grey list British dependencies got a letter too this week - but one threatening sanctions.

 

Given the outcome of G20, the TIEAs and being on the white list - threats of more legislation - nevertheless, I'm now far less worried about Brown's activities now than I was a month ago. Brown may wish to push us further, but he can't force anything at least until all of the British dependencies are on the white list IMO, and he has his work cut out (and the scapegoats he needs) during while he makes that happen.