Advocate Philip Sinel, of legal practice Sinels, said that international attitudes towards tax avoidance were hardening and that revelations about the tax affairs of tech giant Apple could be a watershed moment for jurisdictions like Jersey.
While he acknowledged that significant steps had been made by Island authorities to create a regulatory and legal regime to stop ‘mucky money’ flowing through finance firms, he warned that it might not be enough to appease calls for even greater transparency.
‘Coming on the back of the finding of the Royal Court in Crociani v Crociani, these latest disclosures are going to create huge amounts of international pressure aimed at all of the offshore jurisdictions with a view to introducing complete transparency across the board,’ said Advocate Sinel. ‘It is now only a matter of time.
‘The end of Jersey and other tax havens has been predicted many times, but has not happened. In the light of what has now happened, the Island needs to plan around a more diverse economy. I think the distinction between avoidance and evasion may well diminish. There may well be increasing pressure to move avoidance into the same bracket as evasion. We need a proper diversification policy.’
He added: ‘We will not see the fall-out overnight. It will take time. There’s going to be a lot of hypocrisy because the biggest repositories of dirty money are really places like London and parts of the United States, which has its own tax havens in places like Delaware.
‘I think that Jersey has played its hand quite well because the Island has tried to get rid, or keep clear, of the mucky stuff and throw out the rubbish. Jersey does have checks and balances to keep out international criminals and despots. These are not always effective, but they are present.’
However, the advocate said that the ground was shifting and what Jersey considered acceptable was looking more and more out of step with the thinking of many organisations, governments and media organisations around the world.
‘The reverberations in relation to Apple will be long felt. We are in a new scenario,’ he added.
The case of Crociani v Crociani revealed details of a family feud over assets estimated to be worth $200 million. Legal argument focused on the duties of the trustees of offshore trusts, very often lawyers, and their duty to act appropriately in the interests of the beneficiaries of those trusts.
During the drawn-out dispute between family members, the Royal Court heard that those administering the disputed trust when it was transferred from Jersey to Mauritius, Appleby Trust (Mauritius) Limited, had made a number of breaches of trust.
The Royal Court found that Appleby Mauritius had manufactured correspondence, transferred a promissory note worth millions ‘in a brazen attempt’ to evade the court’s jurisdiction and acted in a ‘shameful and hostile’ manner towards Cristiana after apparently siding with her mother. The court found that the evidence showed the company ‘in a poor light’.
