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‘Landmark’ court ruling has Brexit implications for Jersey & IOM


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https://jerseyeveningpost.com/news/2017/10/19/landmark-court-ruling-has-brexit-implications/

‘Landmark’ court ruling has Brexit implications

THE UK should not be able to place taxes, tariffs and other controls on money flowing between Jersey and itself following a ‘landmark’ English Court of Appeal ruling, legal experts have said.

Questions were raised by the British tax authorities in an inheritance tax case – Routier and Anr vs Commissioners for HM Revenue, which involved the transfer of capital from a UK estate to a Jersey-based charity – over whether the European Union’s free movement of capital rules applied to fund flows between the UK and Jersey.

HMRC argued that due to Jersey’s status as a Crown Dependency, with close ties to the UK, it should not be treated as ‘third country’ sitting outside the EU and should be subject to the UK’s internal controls on capital movements.

Lady Justice Arden concluded, however, that Jersey was a ‘third country for the purposes of those rules’.

A statement released by the Island’s Law Officers’ Department says that the ruling is a ‘landmark constitutional decision for Jersey’.

It says: ‘This case has particular significance as to how the term “third country” is to be understood and applied and the judgment will prevent unnecessary uncertainty for Jersey as Brexit negotiations continue.

‘Free movement of capital is the only EU freedom which expressly benefits third countries as well as member states.

‘The Attorney General argued that Jersey’s status was that of a “third country”.

‘But HMRC argued that Jersey was not a third country and that the Island’s constitutional relationship with the United Kingdom meant that the relationship was a purely internal one for the purpose of capital movement.

‘This could have meant that Jersey might be denied the protections with respect to capital movements guaranteed to third countries.’

The statement adds that the ruling will mean that Jersey will have the same ‘fundamental rights’ to free movement of capital as many other international finance centres.

If the ruling had gone in HMRC’s favour, capital restrictions could have been applied to cash movements and foreign currency exchanges with the Island by the UK.

The statement says: ‘This judgment further safeguards Jersey’s ancient and independent privileges and reinforces the Island’s standing where its third-country status has already been recognised by EU bodies.’

The Attorney General, Robert MacRae QC, said: ‘This issue had not been considered by the UK Courts before and the Court of Appeal gave us permission to be heard because of the importance of the matter to the Island.

‘It is very helpful that Jersey’s status as a third country for the purpose of free movement of capital has been put beyond doubt.’

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When push comes to shove the UK government can take steps to do as they wish with the Isle of Man as regards taxes. The enabling legislation is in place and has been for decades. If it suits Westminster to take control of the Isle of Man tax laws, as well it might as a bargaining chip during the BREXIT negotiations then it will without a seconds hesitation.  

The position that the Jersey occupies as one of the  Îles d'la Manche is very different from that of Mann.

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4 minutes ago, Jasper said:

When push comes to shove the UK government can take steps to do as they wish with the Isle of Man as regards taxes. The enabling legislation is in place and has been for decades. If it suits Westminster to take control of the Isle of Man tax laws, as well it might as a bargaining chip during the BREXIT negotiations then it will without a seconds hesitation.  

Do you mean...the IOM is not master of its own destiny...:pinch:

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28 minutes ago, the stinking enigma said:

Why do we still bother with this pretend independence lark?

So the denizens of Tynwald can puff their egos and the CS/PS can over-grade and over-pay themselves at will.

No charge...

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17 hours ago, Jasper said:

When push comes to shove the UK government can take steps to do as they wish with the Isle of Man as regards taxes. The enabling legislation is in place and has been for decades. If it suits Westminster to take control of the Isle of Man tax laws, as well it might as a bargaining chip during the BREXIT negotiations then it will without a seconds hesitation.  

The position that the Jersey occupies as one of the  Îles d'la Manche is very different from that of Mann.

The Channel Islands and the Isle of Man are exactly the same as Crown Dependencies. Their geographical position is irrelevant.

All have the same relationship with what is now the EU via Protocol 3 appended to the UK's Treaty of Accession. They are not in the Single Market for services save for in the UK although surprisingly it seems the flow of capital is one aspect of the Single Market applying to Third Countries or those deemed to be so for that purpose.

Westminster can indeed in principle legislate over the heads of Tynwald and their Channel Island equivalents but by convention does not do so unless invited. In recent times David Cameron when PM emphasised that the UK respects the Crown Dependencies right to raise and spend their own taxes...although he was asking for co-operation as regards ultimate beneficial ownership.

The Channel Islands and the Isle of Man collectively with the UK created and jointly signed an international identity document laying out the position between them all. The Isle of Man and Jersey have exactly the same relationship with the UK and likewise the same identity internationally.

One can see this document on IOM Govt websites.

I do not recall the UK Government directly interfering with the governance of the Isle of Man in living memory but I do recall it interfering directly with both Jersey and Guernsey.

If I recall aright in the early 1990s the UK sacked the Jersey version of a Deemster for not doing his job properly ie taking too long about it!

Also, the Privy Council initially refused assent to piece of Guernsey financial services legislation for a very long time before in the end allowing it to go through.

The UK did interfere in the Isle of Man over the issue of pirate radio stations many years ago but that is debatable as international and broadcasting matters are or were very much their business and they enforced it.

 

 

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