SIMON GARVEEN – WHEREVER I LAY MY HAT
It might be a Panama hat but I certainly won’t be laying it in Panama. I have and do use offshore structures. In fact, with my clients based all over the world, they are essential tools for cross-border business. Secrecy has never been a motivation but some commercial confidentiality is welcome. After all I don’t want my competitors – or my clients for that matter – to know exactly what I am doing or with whom. That would not be good. And, like most people, I’d rather not take my pants down in public if I can avoid it.
That said I’ve never set anything up to try and hide from the taxman. I like to sleep well at night and, for me, that precludes any sort of arrangement that might get me – or my colleagues and loved ones sometime in the future – into trouble. A can of worms is not the sort of legacy that I want to leave behind.
But many of my acquaintances are getting a bit jumpy with all the hype around offshore. I do explain that, if they’ve done things properly they have nothing to worry about it. Good planning should never rely upon non-disclosure. If it does then there must be something seriously wrong and they need to get better advisors who will ensure that everything is legal and compliant. Anything else will just create trouble further down the line – and it may not be very far down the line at the speed things are moving.
I get on well with my advisors so I’ve had plenty of opportunity to pick their brains about what is happening. What people don’t seem to appreciate is that there is going to be automatic exchange of information on pretty well everything by the end of next year. The Common Reporting Standard (CRS) is being introduced and that automatically requires every bank and financial institution to send information about its clients to any and all tax authorities who might have an interest in the details.
Clearly the revelations from Mossack & Fonseca in Panama are going to hurt a lot of people. Either because it is simply embarrassing for them to be connected to a Panamanian structure – even if, like David Cameron, it was their dad’s – or because they have not been declaring correctly on their tax forms. This, of course, is illegal.
Talking of illegal. I don’t know why nobody seems to be concerned about how the Panama Papers got into the public domain. The papers weren’t “leaked”, they were hacked/stolen. I thought it was illegal to handle stolen goods and therefore should be illegal for any newspapers to hold, let alone publish, the documents. But I suppose if the paperwork reveals that other people have been up to no good, then that gets overlooked.
What has struck me most when talking about the Panama Papers with friends and acquaintances around the world is their asking, “what is the point of ‘offshore’ if it’s not confidential”? I keep explaining that should never have been the point. And if it was, then those undertaking planning of that sort deserve everything they get. The key word is transparency. If we have nothing to hide, financial and legal information can be transparent for tax and law enforcement purposes. That is not the same as everything being publicly available.
I’ve used offshore structures from many different jurisdictions for particular purposes. To my mind Panama has always been a rogue state and a sunny place that attracts shady people. I’ve always steered well clear of it. BVI used to be the flavour of the month but it has become increasingly difficult to open bank accounts for such companies so I tend to favour Hong Kong or Singapore these days. There are a few more formalities and they do require an audit, which is more expensive and inconvenient, but at least they are well-regarded places and their regulations and laws are stable and internationally recognised.
I’m going to carry on using offshore structures. They are a necessary part of my commercial and personal planning because my business and assets are multinational. I don’t really want the details made public for the same reasons that I’m not planning to publish my tax return or post details of my bank accounts on the web. Nor indeed do I want CCTV in my house. The idea that everything you do should be visible to everyone else at all times is too much like “1984” for me.
I think we all have the right to privacy and I want mine to be maintained but I don’t fear my arrangements being looked at by tax authorities anywhere in the world. Hopefully they won’t get too involved because answering questions and supplying information is tedious and time consuming and I’ve got better things to do. Anyone who has ever had a tax inspection will know what I mean. But I don’t worry about the outcome. I know I am compliant and my planning is sound. So I’m sleeping sound as well.