Guernsey: The Walking Dead & Other External Pressures Facing The Channel Islands

Last Updated: 7 November 2012
Article by Michael Morris and Kit Hobbs

Guernsey and Jersey are fleet-footed and professional in the way they respond to international initiatives, to ensure their jurisdictions remain attractive and at the forefront of developments in international finance.

During 2012 the Channel Islands have faced numerous challenges, with potential for a detrimental effect on businesses in the finance and allied sectors, including:

  • the rise of the "Zombie" and the overhaul of tax on high value residential property;
  • the removal from 1 April 2012 of lowvalue consignment relief with respect to VAT; and
  • changes to the tax treatment of qualifying recognised overseas pension schemes, with effect from 6 April 2012.

Here we explore further some of the larger international issues that will continue to affect the Channel Islands.


Halloween may be over, but the UK government is concerned that the country has been overrun by the undead. In March 2012, the government declared war on 'non natural persons' (Zombies) buying high-value properties. Zombies, as we have come to know them, are, to all intents and purposes, overseas companies.

Contrary to popular belief, banging them on the head is not the appropriate way to destroy zombies. The answer instead lies in new property taxes. In 2012 the government introduced new Stamp Duty Land Tax (SDLT) thresholds of 7% for individuals and 15% for Zombies buying residential property worth more than £2 million. The government also announced proposals for a new Annual Tax and the introduction of Capital Gains Tax, both of which were subject to a consultation period which has now ended. The draft Zombie killing legislation is anticipated in mid-December.

The UK government was concerned that Zombies were being used to buy up high value residential property in the UK. Wealthy people were then selling their Zombie on to someone else, thereby avoiding SDLT. In practice, this was not commonplace. The main drivers for holding property using a Zombie, were to give non-UK residents privacy and also comfort, that following their death, their heirs would not face a significant (40%) Inheritance Tax bill - turning the traditional image of a Zombie being a bad thing on its head.

Despite that, the changes to SDLT were introduced earlier this year and the proposed Capital Gains Tax and Annual Tax are set for 2013.

This does not just affect people buying property now; it affects everyone who owns property in a Zombie in England and Wales worth more than £2 million. Zombies will also be hit by an annual tax of £15,000 for properties up to £5 million, rising to £140,000 for properties worth over £20 million. When the Zombie comes to sell the property, it could also be hit potentially by capital gains tax.

If you or your clients already own high value residential property using a Zombie it is vital that you review each structure, to determine whether it remains appropriate. The key is to be prepared, so you can take early decisions on whether restructuring is necessary.


Guernsey, Jersey and the Isle of Man recently announced that they would negotiate partnership agreements with the US to implement its Foreign Account Tax Compliance Act (FATCA) encouraging tax compliance on a global basis, similar to the agreement between the UK and the US signed in September.

The Crown Dependencies are taking a common approach, which will be welcomed by much of the industry and especially those who have offices in two or more of the islands.

The news also follows the joint statement from the UK, US, France, Germany, Italy and Spain on a standardised approach to FATCA compliance from February 2012, which stresses the key policy objective of FATCA of increasing reporting to the US tax authorities.


A vast amount of work is being done by the Channel Islands' combined funds industry to ensure that the jurisdictions are at the forefront of developing an appropriate offshore solution to the Alternative Investment Fund Managers Directive (AIFMD). Extensive consultations have been held and technical proposals have been developed in principle and are ready for implementation in detail.

The AIFMD introduces a passport to allow the flexible marketing of Alternative Investment Funds (AIFs) to professional investors across the EU. Passports will be introduced for EU Alternative Investment Fund Managers (AIFMs) when the directive goes live in July 2013, with passports for non-EU AIFMs anticipated from 2015.

From July 2013, national private placement regimes in individual EU member states can remain in place for non-EU funds being marketed into the EU by non-EU AIFMs, provided there are certain co-operation agreements in place with the regulator of each Member State where AIFs are to be marketed. Many Guernsey and Jersey funds are already actively marketed into the EU this way. Both islands currently have bilateral cooperation agreements with the majority of key EU member states, providing confidence that they will be able to sign co-operation agreements with the regulators of individual member states as soon as possible.

Both Guernsey and Jersey intend to continue to offer fund management and services on a business-as-usual basis. Jersey's industry, government and the regulator are intensively engaged on AIFMD and have been working jointly to identify all steps that need to be taken to preserve Jersey's funds industry and build on the opportunities that the AIFMD presents. Guernsey government is also keenly aware of the importance of timely and well-regulated implementation of appropriate procedures in Guernsey.

Beyond private placement regimes, the Channel Islands are also on the front foot. The Channel Islands won't be able to, and won't need to, obtain an EU-wide AIFMD passport before 2015 – but they are well placed to do so by then. Both islands are aiming to be in the first tranche of nations to sign up to the agreements required to be fully AIFMD-compliant and intend to have a fully compliant regime ready to go ahead of the 2015 date for non-EU countries.

In summary, hard work is being carried out by both Guernsey and Jersey to ensure they stay ahead of the curve in meeting the challenges of the international finance community touching both jurisdictions, either directly or indirectly.

If your business is affected by these developments and requires planning to minimise the risk, please speak to your regular contacts at Collas Crill so that we can work together to arrive at a solution.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions