The tide of euphoria that swept the world on the election of Barack Obama was tinged with a little apprehension on a small island off the coast of North West England.
As part of his new economic order Obama’s campaign had targeted the abuse of tax havens and a Stop Tax Haven Abuse Act put before Congress named the Isle of Man as a non-compliant jurisdiction.
Shortly after that, and following the BBC’s Panorama investigation into tax avoidance and a national newspaper’s campaign on the issue, the UK government also pledged to “take a long hard look at a tax haven sitting in the Irish Sea”. Campaigners on the issue from the Tax Justice Network make well researched and well argued claims that “the Isle of Man costs the UK over £1.5bn a year”.
The island’s reputation wasn’t helped when the UK depositers of the failed Icelandic banks were bailed out by the Financial Services Compensation Scheme, but those who trousered their loot in the Isle of Man branches of Kaupthing lost their money. Cue lots of wailing and gnashing of teeth and threats of legal action.
Down Athol Street in the heart of Douglas, the island’s capital, and behind the brass plates of the island’s financial services specialists, the mood has been darkening. The threat of scandal and the finger of suspicion has often pointed to this peculiar corner of the world. The legislators have also walked that thin line between client confidentiality and providing full disclosure to tax authorities. They have agreed to comply with a demand from the UK Treasury and have received a clean bill of health from the Foot Report into offshore financial centres, but there is still more scrutiny to come.
The North West business community has a strange relationship with the financial centre just off our shores. That the island of just 64,000 souls receives its television news from Manchester – and occasionally features on the news – serves to remind us of its existence, but the links are not strong.
At a time when old assumptions and accepted economic models are being questioned, it therefore seemed very timely to dispatch our intrepid reporter Neil Tague to visit the windswept outcrop off our shores and look at the possibilities for the Isle of Man.
Michael Taylor, editor
Also in: June 2009
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Under Siege
The Isle of Man and other tax-efficient jurisdictions have come under heavy fire this year. Neil Tague travelled to the island to meet Manx businesses and found a business community ready to come out fighting.
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Peter Cowgill
Is this the hardest-working individual in North West business? Michael Taylor catches up with a man sitting atop two companies thinking clearly in the current climate.