Guernsey: Indecent Disclosure? Evaluating The Channel Islands’ Disclosure Facilities

Last Updated: 23 July 2013
Article by Michael Adkins and Adrian Odell

With the signing of both the HMRC Guernsey Disclosure Facility (the "GDF") and HMRC Jersey Disclosure Facility (the "JDF") and the Isle of Man having put in place similar arrangements, all three crown dependencies have now entered into memoranda of understanding ("MoU") with HM Revenue & Customs ("HMRC"). This is the next and latest step in HMRC's "No Safe Havens" anti-tax avoidance/evasion strategy which is estimated to reap recoveries of up to £1 billion in the three crown dependencies alone. Of course, HMRC's efforts are a common theme across the on-shore world, as on-shore governments seek to shift at least part of the responsibility for the global downturn (or indeed the recovery from it) at the door of so called 'tax havens'.

What do they do?

Like the other HMRC disclosure facilities which have preceded them (i.e. with Switzerland and Liechtenstein), the basic premise of the GDF and JDF (which are substantially similar) is the carrot and stick approach.

First, the carrot is favourable treatment by HMRC if you "fess up" to having previously undeclared Channel Islands assets during the life of the facility. Then comes the stick, which is the significant prospect of investigation and prosecution by HMRC once automatic exchange of information comes into place in 2016.

For financial services businesses, the GDF and JDF also envisage a positive obligation to advise their "relevant" clients of the availabilities of the respective facilities both now and just prior to the closure of the facilities.

The Carrot

Like the forerunner disclosure facilities for Liechtenstein and Switzerland, the GDF and JDF provide beneficial treatment in return for voluntary disclosure and payment of any penalty and outstanding liabilities (including interest) during the life of the facility, which in both cases is between 6 April 2013 and 30 September 2016. In summary the advantages for eligible taxpayers are:

1. a 10% fixed penalty on outstanding liabilities for years up to and including 2007/2008 and a 20% fixed penalty for 2008/2009 onwards;

2. no penalty where reasonable care has been taken;

3. a retrospective limit to accounting periods/tax years commencing on or after 1 April 1999; and

4. a 'bespoke service' offering initial nonames contact with HMRC and a single point of contact for disclosures in order to ensure consistency of treatment.

It is important to note that unlike the forerunner facilities, the Channel Islands Facilities offer no express immunity from criminal prosecution, as is the case for the Liechtenstein facility, or even high degree of assurance of no prosecution, as is the case for the Swiss agreement. Although HMRC have indicated that, all things being equal, criminal prosecution is "unlikely", they have made it quite clear that you will still remain fully subject to HMRC's criminal investigation policy.

The Stick

Whilst nothing has been set in stone with regard to the operation of the envisaged automatic exchange protocols, HMRC has recently released (26 June 2013) a consultation paper setting out its views and proposals in this regard. Unsurprisingly, the "son of FATCA" is a chip off the old block in terms of the subjects and detail of reporting envisaged. HMRC is even suggesting adopting the same defined terms as used in the US/UK agreement. One clear key difference though is in the proposed treatment of UK resident "non-doms". It is suggested that these individuals might "optin" to a more streamlined disclosure regime that only requires details on the flow of funds (between the UK and the Channel Islands) to be disclosed.

Who is this for?

Obviously you need to be a UK taxpayer with a need to regularise your tax affairs. You also need to have a beneficial interest in a Guernsey or Jersey:

1. bank account;

2. cash value insurance policy or annuity contract ; or

3. company, trust or other (from a range as defined) legal structure.

It is important to note that interests in listed companies and collective investment schemes are specifically excluded from the scope of the disclosure facilities. Therefore whilst £10 in a Channel Islands bank account will qualify, participation in a Channel Islands fund, or shares in a company listed on the CISX will not.

It should also be noted that whilst the beneficial interest test does require sufficient connection to Guernsey or Jersey, it is expected that disclosure will be made of the taxpayer's worldwide assets or income (where a UK tax liability may accrue in the particular circumstances of the taxpayer). The payoff is that the terms of the facility (i.e. the benefits) will apply to those liabilities too - thus giving the tax payer a clean slate, so far as HMRC is concerned.

A range of other persons are also expressly excluded from taking the benefit of the facility, notably where the funds are the proceeds of crime, those already being investigated for a criminal tax offence and those subject to an "indepth" civil investigation by HMRC.

For financial intermediaries?

The key messages for Guernsey and Jersey financial intermediaries at this stage are:

  • Notify clients who are known to be "relevant persons" before 31 December 2013;
  • Notify "relevant persons" again in the six months running up to 30 September 2016; and
  • Continuing to ensure the proper application of local legislation for the prevention of money-laundering.

There are some very neat questions around how an FI goes about identifying someone as a relevant person, and then the FI's AML obligations in certain circumstances which might follow thereafter. Whilst an FI will have certain information in respect to their clients and their financial affairs anyway, perhaps as part of the on-going CDD obligation or simply in order to allow them to service the client properly, they may not know the exact UK tax status of the client (do you send form letter notifications to everyone on your client list?), and if they are contacted by a client interested in the facility, do they form a relevant suspicion that must be reported in accordance with their AML obligations?

Why good for the Channel Islands?

In short, whilst the facilities are of value to persons who wish to avail of them, they are actually also of benefit to the Channel Islands. Given the economic climate and international drive to protect the tax base of onshore jurisdictions, the integrity and credibility of the Channel Islands is enhanced when it facilitates initiatives of value to others. Arguments against offshore are broken down. This is a win-win when cooperation reaps benefit without unreasonable infringement of domestic interests, much as could be argued in the case of the disclosure facilities. However, reputation aside, the Channel Islands will also benefit financially from the provision of advice and assistance in administering and implementing the disclosure facilities locally. Better a brain gain than a brain drain, and another reason why the Channel Islands are seen as fast developing a new and evolved pool of sophisticated service providers and qualified staff in the finance industry. The growing arsenal is both savvy with the fast coming international initiatives and well capable of maintaining the position of the Channel Islands at the pinnacle of the offshore finance industry. And that is surely not Indecent Exposure?

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