Jersey threatens UK split over tax clampdown

A senior minister from Jersey has warned that the island will consider becoming independent over a clampdown of its financial industry and status as a low-tax haven.

The potential move comes as Britons are being increasingly infuriated by new exposures of tax-avoidance schemes while the UK struggles with the recession and public deficit.

Jersey and Guernsey lost a bid in March to stop the treasury from eliminating a loophole meaning that the islands were able to sell VAT-free DVDs and CDs, and Prime Minister David Cameron spoke out last week against comedian Jimmy Carr’s decision to use Jersey company K2 to avoid paying tax, branding it “morally wrong”.

Philip Bailhache, the assistant chief minister of Jersey, has said that he feels such clampdowns are unfair. He said: “I feel that we get a raw deal…the duty of Jersey politicians now is to try to explain what the island is doing and not to take things lying down.”

He went on to deny that it is Jersey’s purpose to help UK citizens pay tax, but said that the country would not accept changes that the UK government are investigating to its tax, legal and regulatory frameworks, saying: “The island should be prepared to stand up for itself and should be ready to become independent if it were necessary in Jersey’s interest to do so.”

Jersey is the largest Channel Island, with its own judiciary and legal and financial systems. Although not a member of the EU, it is treated as such for the purpose of trade.

Abbie Cavendish