Offshore

UK Offshore Savers May Be Taxed To Fund Bailouts - Report

Tom Burroughes Editor London 11 December 2008

UK Offshore Savers May Be Taxed To Fund Bailouts - Report

Savers with money in financial centres such as Guernsey and the Isle of Man could be forced to pay tax on their offshore bank accounts to fund a deposit protection scheme, according to the Times (of London).

Industry experts believe that the measure may be announced as part of a government-backed review into offshore financial centres, the Times said. It did not cite any sources from HM Revenue & Customs on its report, however, as to how such a tax would be collected in practice.

Andrew Jupp, head of tax at Tenon, the accountancy firm, was quoted as saying: “I would not be surprised if we saw a tax levy on income from offshore bank accounts as the quid pro quo for granting some level of protection, such as guaranteeing a certain level of cash deposits. The Treasury could try to strike a deal with overseas banks to ensure a certain amount of interest is withheld at source.”

The review, which was announced by finance minister Alistair Darling in November’s Pre-Budget Report statement in the UK parliament, will examine the regulation and transparency of offshore havens, as well as their tax arrangements. It comes as confidence in offshore banking has plummeted after thousands of UK savers lost money in offshore accounts owned by Icelandic banks this year, such as Landsbanki Guernsey and Kaupthing Singer & Friedlander Isle of Man.

The offshore review got under way last week and is being lead by Michael Foot, previously managing director of the Financial Services Authority, the UK financial regulator. The review will cover Jersey, Guernsey, the Isle of Man, Bermuda, the Cayman Islands, Gibraltar, the Turks and Caicos Islands, the British Virgin Islands and Anguilla .

A key issue for the review is that specific tax arrangements and deposit protection schemes vary amongst the different offshore territories.

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