By Craig Brown, Director of IOMA Solutions
The lack of a clear majority in the UK election could produce an impasse between the parties, resulting in a political stalemate, or even an effective minority rule as the smaller parties trade support for a strong bargaining position.
The question is, what does the elction results mean for the future of offshore tax planning in locations such as the Isle of Man? Since Labour came to power in the UK in 1997, we have experienced probably the most direct and sustained challenge to tax planning ever, a move which many suggested might put an end to offshore tax planning.
Once we look beyond the hyperbole we can see that this was never going to be the case, although the tax planning industry is certainly finding things tougher. Whether Labour’s loss of a Commons majority will result in a change in attitudes at HM Treasury and HM Revenue & Customs remains to be seen, although it would be naïve to think that offshore tax planning will ever be truly accepted.
Perhaps one thing we can hope for is that the governing parties in the UK might learn from the need for co-operation within a coalition government, and in doing so may apply a similar, less confrontational approach to offshore jurisdictions. Of course there is a need to protect the exchequer from abusive tax planning, but by working together to eradicate the unacceptable face of tax avoidance, and to ensure proper control and regulation of tax planning within the law, we might actually see a positive contribution to the national economies of both the Isle of Man and the UK.
