Tweet
Sorry, Michael. You know the itulipers, old man.
August 7, 2009
British Financier Faces Scrutiny From Tax Haven
By LANDON THOMAS Jr.
ST. PETER PORT, GUERNSEY — The panoramic view of the English Channel and Guernsey’s craggy western shore from Guy Hands’s (shortened from the Hands-In-Your-Pockets) new £6 million home is splendid. No less so is the vista from his soon-to-be-completed rooftop office here on the eastern side of this small English-speaking island just off the French coast of Normandy.
But the most renowned British private equity financier has not abandoned the land of his birth just for the seaside splendor. What has mainly drawn him to Guernsey are its welcoming tax rates — 20 percent on income and, crucially for those in the business of buying and selling assets, zero tax on capital gains.
The question is: Will he get away with it?
With his appetite for big deals and the limelight that surrounds them, Mr. Hands, 49, came to symbolize the boom years in the City of London, much as Stephen A. Schwarzman, the chairman of Blackstone Group, epitomized Wall Street’s own era of excess.
He is by no means the first rich Briton to take advantage of a loophole that allows individuals to become nonresidents for tax purposes but keep their passports as long as they do not spend more than 90 days a year on British soil.
But the time-worn trick of moving one’s main residence to the Channel Islands, Monaco or the Cayman Islands, for example, while maintaining business, social and cultural ties at home is not as simple as it used to be. That is because the British authorities have started to crack down on the practice.
The increased scrutiny comes at a time of heightened sensitivity to tax avoidance worldwide. While moving to a tax haven is still rare among the rich, it represents the tip of the iceberg of the far more common practice of moving substantial sums of money abroad, often without reporting it to the authorities.
The numbers are vast and hard to pin down, but according to the Organization for Economic Cooperation and Development in Paris, wealthy individuals hold about $6 trillion offshore, resulting in billions of dollars in lost tax revenue for their home countries annually.
At the Swiss bank UBS, the practice of designing complex ways to insulate the offshore earnings of its American clients has been the subject of an investigation by the U.S. authorities. And the prospect of higher tax rates in the United States has raised new questions about how wealthy Americans will respond to being asked to pay more to the government.
To the surprise of many, a British court ruled last autumn that Robert Gaines-Cooper, a retired businessman who had lived in the Seychelles Islands in the Indian Ocean since 1975, was still a British resident and owed Britain taxes on his income for much of time he was living abroad.
Even though Mr. Gaines-Cooper’s lawyers argued that he had spent less than 90 days a year in Britain, the court cited instead his regular visits to the races at Royal Ascot, the fleet of Rolls Royces he kept in England and the fact that his son and wife lived in the country.
That decision, while still subject to a final appeal, sent a collective shiver through the tax-exile community.
http://www.nytimes.com/2009/08/07/bu...l?ref=business
August 7, 2009
But the most renowned British private equity financier has not abandoned the land of his birth just for the seaside splendor. What has mainly drawn him to Guernsey are its welcoming tax rates — 20 percent on income and, crucially for those in the business of buying and selling assets, zero tax on capital gains.
The question is: Will he get away with it?
With his appetite for big deals and the limelight that surrounds them, Mr. Hands, 49, came to symbolize the boom years in the City of London, much as Stephen A. Schwarzman, the chairman of Blackstone Group, epitomized Wall Street’s own era of excess.
He is by no means the first rich Briton to take advantage of a loophole that allows individuals to become nonresidents for tax purposes but keep their passports as long as they do not spend more than 90 days a year on British soil.
But the time-worn trick of moving one’s main residence to the Channel Islands, Monaco or the Cayman Islands, for example, while maintaining business, social and cultural ties at home is not as simple as it used to be. That is because the British authorities have started to crack down on the practice.
The increased scrutiny comes at a time of heightened sensitivity to tax avoidance worldwide. While moving to a tax haven is still rare among the rich, it represents the tip of the iceberg of the far more common practice of moving substantial sums of money abroad, often without reporting it to the authorities.
The numbers are vast and hard to pin down, but according to the Organization for Economic Cooperation and Development in Paris, wealthy individuals hold about $6 trillion offshore, resulting in billions of dollars in lost tax revenue for their home countries annually.
At the Swiss bank UBS, the practice of designing complex ways to insulate the offshore earnings of its American clients has been the subject of an investigation by the U.S. authorities. And the prospect of higher tax rates in the United States has raised new questions about how wealthy Americans will respond to being asked to pay more to the government.
To the surprise of many, a British court ruled last autumn that Robert Gaines-Cooper, a retired businessman who had lived in the Seychelles Islands in the Indian Ocean since 1975, was still a British resident and owed Britain taxes on his income for much of time he was living abroad.
Even though Mr. Gaines-Cooper’s lawyers argued that he had spent less than 90 days a year in Britain, the court cited instead his regular visits to the races at Royal Ascot, the fleet of Rolls Royces he kept in England and the fact that his son and wife lived in the country.
That decision, while still subject to a final appeal, sent a collective shiver through the tax-exile community.
http://www.nytimes.com/2009/08/07/bu...l?ref=business
Comment