Jersey could breakaway from UK after tax row


Jersey is getting a “raw deal” from the UK and should be “ready to be independent” after coming under pressure over its tax schemes, a politician has said.

The island’s assistant chief minister Sir Philip Bailhache has called on officials to prepare to sever ties with the UK after Jersey was on the receiving end of a number of political crackdowns and attacks on its tax rules.

It is “very plain” that there is a clash of interests with Westminster, Sir Philip said, as relations with the government have become strained over the last five years.

The largest of the Channel Islands has come into the spotlight recently after prime minister David Cameron said it was “morally wrong” for comedian Jimmy Carr to use Jersey-based business K2 to avoid paying tax.

It came just months after Jersey, along with Guernsey, lost a High Court bid to prevent the Treasury from scrapping a tax loophole which allowed the Channel Islands to sell CDs and DVDs without VAT.

Sir Philip told The Guardian: “I feel that we get a raw deal. I feel it’s not fair… I think that the duty of Jersey politicians now is to try to explain what the island is doing and not to take things lying down.

“The island should be prepared to stand up for itself and should be ready to become independent if it were necessary in Jersey’s interest to do so.

“I hope that the constitutional relationship with the UK will continue. But if it becomes plain that our interests in fact lie in being independent it doesn’t seem to me that we should bury our head in the sand and say we’re not going to do that.”

Mike Kerridge, tax consultant at Charter Financial in London, said: “If they are saying they want to break away from the UK and become independent from it then I can see their point.

“While there have been things that have gone on in the past that may have upset people by virtue of the fact they are a tax haven, in recent years to have done a lot more to get their act together.

“They are stable and reputable and you have good professionals down there.”

Kerridge added: “I have been told by major corporate trustees out there that if they take on anything which has tax implications on the UK then they have to have a tax report, which may be looked at or seen by the Jersey authorities.”