Foot Report welcomed by Isle of Man The British Crown Dependencies have welcomed the findings of the UK government’s review of the dependencies, published on October 29, which recognizes their economic benefit to the United Kingdom, and efforts to achieve compliance with international standards.

The report, authored by Michael Foot, examines the opportunities and challenges facing the British Crown Dependencies (Guernsey, the Isle of Man, and Jersey) and six Overseas Territories (Anguilla, Bermuda, British Virgin Islands, Cayman Islands, Gibraltar, Turks and Caicos Islands), with regard to:

  • Financial supervision and transparency;
  • Taxation, in relation to financial stability, sustainability and future competitiveness;
  • Financial crisis management and resolution arrangements; and
  • International co-operation.

Commenting on the release of Foot’s findings, Financial Secretary to the UK Treasury, Stephen Timms stated that:

“I welcome Michael Foot’s report which comes amidst a real step change in the international determination to tackle tax and regulatory havens under the UK’s leadership of the G20.”

He continued: “This report sends a strong signal to overseas financial centres that they must ensure that they have the correct regulation and supervision in place, while also ensuring their tax bases are more diverse and sustainable to withstand economic shocks – this is essential to their long term stability.”

In his report to HM Treasury, Foot highlighted that:

  • The Crown Dependencies make a significant contribution to the liquidity of the UK market, providing net financing to UK banks of USD332.5bn with Jersey by far the largest net contributor;
  • The Crown Dependencies’ decisions to build up reserves in recent years of growth has increased their resilience;
  • The Crown Dependencies have good frameworks for tackling money laundering and terrorist financing, as recognised by the Financial Action Task Force (FATF);
  • All Crown Dependencies had met the Organization of Economic Cooperation and Development (OECD) standard for tax transparency by the G20 meeting in April 2009, and are encouraged to continue to negotiate further TIEAs;
  • The UK should call on all EU member states and third party countries to move to automatic exchange of information under the EU Savings Tax Directive, and so enable Jersey and Guernsey to introduce automatic exchange by ending the current transition period;
  • The UK should take the lead internationally in encouraging improvements to international standards and transparency of beneficial ownership;
  • The UK ‘tax gap’ due to suspected tax avoidance is significantly lower than previous estimates – rather than GBP11.8bn previously claimed, this is now estimated to be no more than GBP2bn globally (with any avoidance through offshore centres being an unidentified component of this);
  • Jurisdictions should consider whether an Ombudsman scheme is justified;
  • Jurisdictions that propose to offer protection to retail depositors must ensure that compensation schemes can be understood by those depositors.

Responding to the report, the Isle of Man’s Chief Minister, Tony Brown, applauded the findings as a “positive, constructive, and independent assessment”.