Page last updated at 12:08 GMT, Friday, 14 May 2010 13:08 UK

UK may focus more on Channel Islands' tax

Vince Cable
Vince Cable has spoken in support of more controls on offshore centres

The change of government in the UK could lead to a greater focus on the Channel Islands, a tax expert believes.

Vince Cable, an outspoken critic of offshore finance centres, has been appointed business secretary.

Anne Redston, Professor of Law at King's College London, said she believed the Liberal Democrat MP's influence could soon be felt locally.

However, senior island politicians said they believed it should not be a cause for a concern.

'Tax avoidance'

Mr Cable has previously made no secret of his desire to place offshore jurisdictions under closer financial scrutiny.

Professor Redston said: "Both the Tories and the Liberal Democrats have said they are going to focus on tax avoidance more generally, so I do think there is going to be a bit of a spotlight thrown on the Channel Islands over the next 12 to 18 months."

Jersey's Chief Minister, Terry Le Sueur, said it was something the islands "should be aware of but not too worried about" as he believed the aspects Mr Cable would be focusing on were more relevant for other financial jurisdictions.

Guernsey's Treasury and Resources Minister Charles Parkinson said: "Generally I'm encouraged by the formation of the new administration in London and I think we can do business with them.

"Of course there will be a long span of opinion in the coalition from those who are very hostile to us, to those who are very supportive, but I don't believe Vince Cable on his own will be able to jeopardise our future.

"Very recently Michael Foot [Chairman of the UK office of Promontory Financial Group} did a review of the Crown Dependencies for HM Treasury, which found that the tax leakage from the UK was far lower than the Liberal Democrats had ever been fearing.

"I think we have ample evidence now that the cost to the UK exchequer is not as great as they thought it was and the benefit to the City of London is real - we're talking about £325bn of liquidity flowing into the city from these islands."

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