Cable, claptrap and tax-havens.......

Cable is grandstanding again on tax havens, but then he is a bit of a single issue fanatic.

 

So I make no apologies for reposting my piece on this with a few updates.

 

We may soon expect to see more posturing and grandstanding about tax havens from St Vincent Cable and the LibDems generally (well, I got that right a year or so ago).

 

Unsurprisingly, there is no evidence so far that they have any idea what they are talking about. So here’s a brief tutorial for Vince, who seems to have a thing about the Isle of Man. Perhaps he hates kippers.

 

Offshore banks attract two main categories of customer – individuals who want to put their stash in a low or no-tax country, and companies that are based in same so as to minimise their tax liabilities, such as the firm that has a debt-collection contract with the UK Tax authorities.

 

The UK Government is between the upper and the nether millstone with companies. The Treasury proposals to clamp down on British multinationals avoiding tax by using tax havens were quietly withdrawn when companies such as WPP (the world’s leading PR and advertising company) smartly decamped to Dublin.

 

But the Government is in another bind; over the years most public buildings have been financed through PFIs – public/private finance initiatives which are really lease-back arrangements where the money is provided by the private sector and the Government is effectively a tenant (it keeps it off the balance sheet, you see) .

 

The £450 million Ministry of Defence offices are owned by a PFI outfit that is incorporated in Jersey and has a Dublin tax residency (Irish corporation tax is much lower). Even more embarrassing, the Home Office is owned by a consortium of financiers through a Luxembourg holding company and a parent registered in Guernsey. And the former Trade Minister was Chairman of an off-shore bank which has been investigated for laundering money from Pakistan, Qatar and Zimbabwe.  Allegedly.

 

Oh dear!

 

The OECD and other meddlers having been pressing the offshore governments for some time over the issue of ‘transparency’ i.e. disclosing confidential customer information to thieving politicians The big tax evaders will go to the no-transparency jurisdictions like Panama, Singapore etc. And do these nitwits seriously believe that Switzerland and Lichtenstein are going to kill the golden goose to satisfy political windbags in Europe and the US?

 

If Obama is looking for a place to start, how about the State of Delaware? Does he know that, according to a piece in The Economist, several US States have large tax-haven business? In Nevada, for example, there is one off-shore bank for every six people. No accounts or details are either sought or published. There is no tax on interest earned by non-state residents. So there you have it; complete secrecy and no tax. Perfect!

 

And would it surprise you, Vince, that the UK is the second largest tax haven after the US? Or that 90 of the world’s 100 largest corporations have off-shore bolt-holes?

 

Here is how to do it. Open the Internet. Create a company in about 20 minutes. Register nominee directors and shareholders. Issue bearer-shares. That’s all there is to it.

 

What kind of sanctions will be imposed on Panama where blind trusts abound and where (like Switzerland and Lichtenstein) disclosure of banking information is a criminal offence?

 

Does Vince really believe that there is a huge pile of dosh in the Cayman Islands?

 

The reality is that the off-shore banks and ‘investment vehicles’ are  brass plates on the wall of  firms of accountants. The money is instantly recycled back to the City, Wall Street etc. That is how Darling managed to steal £830,000,000 of deposits in KSF Isle of Man. The City makes a bundle out of handling the transactions and the Revenue collects big-time.

 

On the topic of KSF, most of the depositors were repaid in full from the compensation scheme. The maximum is £50,000. Not exactly fat-cat tax avoiders. Many ordinary people have off-shore accounts because they are expats without a UK residential address and therefore can’t hold a UK bank account. One poor chap put over £1,000,000 into KSF a couple of days before the Darling larceny. He had just sold his farm in UK on moving to the US, so he had no UK residence for a bank account.

 

Switzerland et al will jerk everyone around until the politicians find some other diversion from the real issues of how to put the Humpty Dumpty economy back together again, since they clearly have no ideas. Meanwhile, billions will be flowing out to Dubai, Hong Kong, Singapore. Why the authorities have so little understanding of how you avoid their unpleasant attentions is beyond my ken. When you discover oil under the back garden and have gazillions to shift, the procedure is quite simple.

 

You form a limited company in the Seychelles. The amiable regime there does not require a company to reveal its directors or shareholders or to submit any accounts, merely to re-register annually. You then open a numbered bank account in Switzerland at modest cost in the name of the company. You transfer all your well-deserved moolah to the account. There is now no paper trail between you and your money is safe from Westminster benefit cheats.

 

Job done and trebles all round