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The Association of Investment Companies (AIC) has written to MPs in defence of offshore tax havens and the Channel Islands in particular — all of which 'offer extremely high standards' of investment.
The organisation has written to the members of the Treasury Select Committee in support of the Channel Islands' position as a financial centre and home to an increasing number of investment companies.
The AIC is 'keen to ensure that MPs understand the legitimate role that “going offshore” can play'. Its remarks were made in a response to the Treasury Select Committee's request for evidence to support a forthcoming inquiry on offshore financial centres.
The association's director-general, Daniel Godfrey, conceded that 'the impact of offshore centres on the UK's tax-take has a high profile at the moment, and it is entirely understandable that MPs want to look into this matter.
However, he added that 'the issues raised by this area are diverse and complex. Unfortunately, debates on this agenda all too often start with a presumption that going offshore is inherently undesirable.
'In fact, this is not the case. Using domiciles such as the Channel Islands can secure significant consumer benefits as it allows our members to offer investment strategies which cannot be competitively delivered by a UK-based investment company.'
Mr Godfrey then went on to criticise the UK tax regime, which 'has not kept up with the evolving needs of the sector', meaning Channel Islands have become 'attractive and competitive alternatives'.
'Clearly there may be some issues that MPs want to address at the end of this process,' said the AIC DG.
'Not all offshore centres or the activities carried out offshore are the same - but the last thing we want to see are misgivings about poor practice in one location distorting views and leading to all offshore centres being tarred with the same brush when, in reality, territories such as the Channel Islands offer extremely high standards.
'Hopefully, helping MPs understand the benefits which can be delivered by locating offshore will help us achieve our overall goal of protecting the reputation of our members, ensuring that there is proper understanding of the high standards they apply offshore, and guarding against unhelpful policy interventions by the UK Government'.
Earlier this week, the deputy director the US government's Financial Crimes Enforcement Network agency, William F. Baity, recommended that the Isle of Man rebrand itself as an 'independent financial centre' to avoid the negative connotations of associated with offshore tax havens.
