London Calling: offshore battle intensifies onshore
July 2024
Huge ambition, big expansion, intense competition. Battle lines are drawn for offshore firms to wage war with each other in London’s lucrative legal market.
Amid the dying embers of the last Labour government, the then prime minister Gordon Brown was uncharitably described in a House of Lords debate as “strutting the world’s stage as Mr Clean-up, the man to make tax havens and tax dodgers quake in their boots.” Wind forward to 2024. Although the newly elected Labour government has outlined an ambitious legislative plan, the recent King’s speech had nothing to say about offshore centres, while the only British overseas territories (BOTs) name-checked in its election manifesto were Gibraltar and the Falkland Islands. Nevertheless, Sir Keir Starmer’s tightly-knit team appears committed to ending offshore trusts being used to avoid inheritance tax and to extending the previous government’s plan to scrap the ‘non-dom’ status, requiring those who live in the UK, but are resident overseas, to pay UK tax. In an understated yet cutting critique, Tim Ridley, former chairman of the Cayman Island Monetary Authority (CIMA) and a former senior partner of Maples, reportedly said: “It’s just cricket as usual: it’s time to let the other team go into bat. Sadly, the UK has got to such a point in its decline that I doubt the change in government will make any real difference in the UK. Cayman will just have to keep a close eye on things like increased beneficial ownership disclosure and the non-domicile rules.”
Understandably, decline is not a word that features in Rachel Reeves’ lexicon, although her plans may ultimately necessitate a reset of the tax system, higher borrowing – or potentially, both – in order to avoid any further cuts to public expenditure. Since she first walked into 11 Downing Street on 5th July, Britain’s first female chancellor has concentrated on determining her economic plan, predicated on a dash for growth through increased investment, further fuelled by planning reform and building houses. In that respect, she arguably reflects the strategic ambitions of big offshore firms in London. Their recent dash for growth is already evident from a collectively enlarged City footprint and, in anticipation of increased demand and greater opportunity, their ambitious plans for further expansion. To some degree, of course, the latter is based on the new government doing the right thing from their perspective. Eric Flaye, London managing partner of Conyers, suggests: “If the UK tries to capitalise on becoming more nimble as a financial services centre – a big if – that could benefit offshore jurisdictions.” Jasmine Amaria, managing partner of Carey Olsen’s London office, adds: “We need a clear economic plan that supports the growth we all want to see. It’s not enough to say that you will tax corporate entities and private equity managers – those companies need to be earning well in order to make those contributions. Labour needs to think carefully not just about taxing, but about growing the economy, as that is the only way anybody wins.”
