The tax haven problem

I was woken early one morning by a hammering on my back door. I quickly dressed and rushed downstairs to find Alun in an excited mood.

 

“I’ve just rented out my shed, Jed.”

 

“You’ve rented out your shed? But your shed’s tiny.”

 

“That doesn’t matter, Jed. I’m getting 250,000 mainland pounds a year.”

 

“250,000 mainland pounds. Who on Earth would pay that sort of money for hire of a shed?”

 

“DodgyBusiness Ltd, that’s who.”

 

“What, the notorious offshore trader that makes millions of mainlands pounds and doesn’t pay a penny in tax. Why would they want your shed?”

 

“They don’t want the shed Jed, they’ve told me I can continue to use it. They just want Happy Island’s independent, tax-exempt status. By saying that my shed is the base for their entire company they don’t have to pay the mainland government any tax.”

 

“The base for their entire company? But, they’re not based here.”

 

“They are now Jed. I’m the new company director.”

 

“The company director?  But you’ve never directed anything in your life.”

 

“It’s just a paper title, Jed. I don’t actually have to do anything. They just need a resident of the island to be the official head of the company.”

 

“You’re helping a corrupt company dodge taxes.”

 

“Yes Jed, and I’m getting a fortune for it. I’m rich Jed.”

 

“It hardly seems ethical.”

 

“Well, no mainland company has ever paid us any taxes, so we’re just returning the favour. It’s just the little man getting revenge. You should do the same Jed.”

 

“Me? I don’t even own a shed.”

 

“No, but you own a geep-pen.  And we co-own the empty house, we could let it out one room per company.”

 

“One room per company. But how many companies are there?”

 

“Hundreds Jed, thousands, all willing to pay good money to be based in a tax-free environ.”

 

I let the matter rest, hoping that it would soon be forgotten, like so many of Alun’s previous plans. However, the obsession with turning Happy Island into a tax-haven remained and Alun’s behaviour became increasingly strange. At approximately six thirty the next morning I was woken by a polite knocking on my back door. I dressed and went downstairs to find a complete stranger dressed like a butler.

 

“Can I help you?” I asked.

 

“Mr Davies would like to see you,” he said.

 

“Mr Davies? You mean Alun? Why has he sent you?”

 

“Mr Davies is currently engaged in important business matters and asked me to make arrangements on his behalf.”

 

“Who are you exactly?”

 

“I am Mr Davies’ manservant sir. You may call me Jarvis.”

 

I followed Jarvis to Alun’s house, where he was indeed busy, his desk festooned with paperwork.

 

“What’s all that mess?” I asked.

 

“This mess, Jed, is the future of our island.”

 

“The future of our island?”

 

“It’s my plans Jed. We’re going to set up the Happy Bank.”

 

“The Happy Bank?”

 

“It’s just what companies need, Jed. An independent bank, not tied down by mainland rules and regulations, free of the burdensome tax demands.”

 

“So you want to set up a dodgy offshore bank.”

 

“The Happy Bank, Jed.  Call it by its title. We can be co-directors.”

 

As the weeks and months progressed I saw less and less of Alun. Occasionally I’d see Jarvis, who arrived with a piece of paper for me to sign or some legal documents to read, and I’d pass him a message for Alun, but eventually even Jarvis became too busy and more often than not it was the underbutlers who visited me, or the underunderbutlers, if anyone at all.

 

Happy Island had never been so busy. Every day various financial consultants, lawyers, businessmen and crooks would arrive on the early boat to sign deals, set up companies and do business, before leaving on the lunchtime boat, with only bulging Happy Bank accounts to show for their journey.

 

However, I couldn’t doubt Alun’s business acumen. In next to no time I had become a multi-millionaire, I was director of no less than 133 dodgy businesses and co-Chair and co-founder of one of the largest offshore banks in tax-dodging history.

 

All this wealth though, meant little to me. There was nothing to spend the vast sums of money on. True, I could shop online if I so chose, but the internet connection on Happy Island remained unreliable and whenever I tried bidding on ebay the site always crashed. Besides, on such a small island I had nowhere to put things.  

 

One morning I was surprised to be woken early in the morning by a hammering on my back door. It was Alun, in excited mood.

 

“Come and see Jed, come and see.”

 

I followed Alun outside, only to find the sky blocked out by an immense object overhead.

 

“What on Earth is that?” I asked.

“It’s my hover-island, Jed.”

 

“Your hover-island?”

“Come and see. You’ll be amazed.”  With these words Alun started to climb a rope ladder that was hanging down from the hover-island. I had no choice but to follow him.

 

“It’s amazing isn’t it Jed,” he said when I reached the top.

 

It was indeed an amazing site. The hover island Alun had built was an exact, to-scale replica of Happy Island, complete with Elephant Mountain in the middle and Refrigerator Bay and its 213 abandoned fridges. There was even an identical copy of my house, Alun’s house, Alun’s shed and the geep pen.

 

“You’ve built an exact replica of Happy Island.”

 

“Perfect to the very inch, Jed.”

 

“And it’s hovering above the actual island.”

 

“Well it needs to be accessible Jed. There’s no point having our very own hover island if we can’t get to it.”

 

“But it’s blocking off the sunlight.”

 

“That doesn’t matter Jed. If its light we need we just climb up to the hover-island. You’re free to use it any time you like.”

 

During the  course of the next few days the hover-island attracted a great deal of attention, with mysterious strangers from the mainland coming to visit the structure, assumedly all officials from the numerous offshore companies we ran.

 

A few days later I was again woken early by a hammering on my back door.

 

“We’re poor Jed,” Alun shouted up the stairs. “All of the companies have left the island.”

 

I hastily dressed and rushed downstairs, attempting to console Alun. “Left. Why would they all leave so suddenly? You haven’t introduced a tax have you?”

 

“No Jed, of course not, you know my views on taxes. No, the companies were all so impressed by our hover island that they’ve decided to build their own. You see that way they don’t have to rely on us, they can just build their own independent hover nation wherever they choose, all of them tax-exempt and free from regulation. They can appoint themselves as directors. Even as I speak there are a hundred floating islands drifting across the mainland capital.”

 

“Well, I said, to be honest I’m happy to be free of all my responsibilities. Besides, we’re not exactly poor, we must have made tens of millions from all our directorships.”

 

“That’s just it, Jed. I  spent all of our money building the hover-island, we’re completely skint.”

 

“We’re completely skint! You mean you spent my money on your ridiculous hover-island.”

 

“It’s OUR hover island Jed, I never said it was only mine. Why, the rope ladder’s nearer your house than to mine, you can hardly complain.”

 

“What about the Happy Bank. We still own that. That’s got to be a valuable asset”

 

“The Happy Bank is finished Jed, all of the dodgy offshore companies have set up their own hover-banks, we don’t have any customers.”

 

“So all we have to show for our millions is a massive replica of our own island that’s hovering above us, blocking out all of the sunlight.”

 

“That’s right Jed. I’ve had to let all my staff go, even the butlers, I can’t afford any of them.”

 

In spite of the massive changes that followed the island’s impoverishment, we soon settled into a new routine. Every morning Alun would call and wake me and we would climb up onto the hover island and spend a lazy day doing whatever we wanted.

 

However, one morning I was woken early by an unexpected hammering on my back door. I quickly dressed and rushed downstairs to investigate, only to find Alun in an agitated state.

 

“It’s the hover-island, Jed,” he said, “it’s gone.”

 

“Gone?”

 

“Yes Jed, it must have floated off. Come and see.”

 

I followed Alun outside where I could see the whole of Happy Island covered in glistening sunlight, not a shadow to be seen.

 

“I wonder where it’s gone,” I said.

 

We set about exploring Happy Island for clues about the mysterious disappearance. It didn’t take long. We found the rope cables that had bound the floating island to ours, all of them chewed through, as if by hungry geep.

 

“Oh,” I said.

 

“That’s it Jed, all our wealth gone, just floated off over the ocean, nibbled free by inadequately restrained geep.”

 

And that was the last we ever saw of the hover island. However, we soon adjusted to the loss, spending our time on Happy Island instead which was now bathed in sunlight. There are times now, indeed, when I wonder if we ever really needed a hover-island in the first place.