The New York Times on Friday puts an undoubtedly unwelcome spotlight on the Guernsey haven of one of Britain’s most high-profile taxpatriates, financier and private equity player Guy Hands.
As the NYT notes in a long piece complete with photo of his well-appointed mansion:The panoramic view of the English Channel and Guernsey’s craggy western shore from Guy Hands’s new £6 million home is splendid. No less so is the vista from his soon-to-be-completed rooftop office here on the eastern side of this small English-speaking island just off the French coast of Normandy.
But, the report adds, Hands has “not abandoned the land of his birth just for the seaside splendor”:
What has mainly drawn him to Guernsey are its welcoming tax rates — 20 per cent on income and, crucially for those in the business of buying and selling assets, zero tax on capital gains.
The question is: Will he get away with it?
Indeed. There are some ominous warning signs for all British taxpatriates. As the report points out, “the time-worn trick of moving one’s main residence to the Channel Islands, Monaco or the Cayman Islands, for example, while maintaining business, social and cultural ties at home is not as simple as it used to be”.
Hands – whose personal net worth is estimated at £200m or more – famously had a public hissy fit last year after a rise in the base rate of UK capital gains tax, and this year made it known that he felt the government’s move to increase income tax for big earners was the last straw. He registered for non-domiciled status and moved his personal residence from the UK to Guernsey, where his firm, Terra Firma Capital Partners, is already registered and has long had an office.
So far so good, and so rich (despite some problems with EMI and its refinancing this year).
However, as the NYT and others have pointed out, the British authorities have started to crack down on tax exiles – tightening up their definition of what “living off-shore” means — and what it doesn’t mean.
The report reminds us of a British court ruling last autumn that Robert Gaines-Cooper, a retired businessman who had been living in the Seychelles Islands in the Indian Ocean since 1975, was still a British resident and owed Britain taxes on his income for much of time he was living abroad:
Even though Mr Gaines-Cooper’s lawyers argued that he had spent less than 90 days a year in Britain, the court cited instead his regular visits to the races at Royal Ascot, the fleet of Rolls Royces he kept in England and the fact that his son and wife lived in the country. That decision, while still subject to a final appeal, sent a collective shiver through the tax-exile community.
Ominously perhaps, for Hands, his wife, who owns their stately home in the Kent countryside southeast of London, also runs a UK-based hotel business, according to the report. Also, it says, three of the couple’s four children still go to British schools and the majority of Terra Firma employees, about 60 in number, are based in its London office.
As Peter Vaines, a tax lawyer who represented Gaines-Cooper, told the NYT: “Mr Hands will certainly have some questions to answer”.