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Paradise Papers: Isle of Man law 'sanctioned' tax dodge

Paradise Papers: Isle of Man law 'sanctioned' tax dodge
From BBC - November 6, 2017

The Isle of Man passed a law that would help tax evaders, documents in the Paradise Papers show.

Lawyers promoting a scheme allowing Swiss bank clients to hide their cash offered to help the authorities amend rules in November 2004.

The law was changed seven months later, amid an EU clampdown on tax dodging.

BBC Panorama has spoken to the man behind the scheme who claims an Isle of Man regulator was aware the new law would help tax evaders.

Mark Morris, a tax adviser and leading expert on tax loopholes, told the programme regulators in offshore territories used to regularly help financial institutions in this way.

"I think in those times, it was wrong, and there were regulators helping financial institutions," he said.

"But today, this would never be allowed."

'Does not seem ethical'

Mr Morris devised the scheme to help wealthy clients avoid the European Union Savings Directive (EUSD).

The EUSD was introduced in 2005 to stop people from within one part of Europe putting assets in an account in another country without declaring it. Most of the people targeted by EUSD were therefore already evading tax.

The idea was that EU-based banks and those in other nations including Switzerland would make automatic deductions for tax from interest payments.

Mr Morris's scheme was designed to be exempt from the reach of the EUSD. It involved Swiss bank deposits being moved into a redeemable insurance product sold by a new Isle of Man company, Minerva Assurance Ltd.

The draft of an agreement with an unnamed bank says of the proposals: "Policy applications and surrenders are transacted expeditiously.... Confidentiality is maintained, as the individual client is not directly involved."

'Get in touch'

The leaked documents outline events in late 2004 when lawyers acting for Mr Morris held talks with the IoM insurance and pensions regulator, David Vick.

After it became clear that the new insurance company would not be authorised to operate under existing laws, they appear to have offered to help Mr Vick draft new regulations.

A letter they wrote to Mr Vick in November 2004 after their discussions asks him to get in touch "if you believe it would be helpful for us to provide you with ideas as to how to improve the regulations to more readily accord with our client's proposal".

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