Peter Macfarlane & Associates

For about as long as I remember, I’ve been bucking trends by advising offshore clients against Swiss banks in general and UBS in particular because they are not safe from a privacy point of view.

According to the NY times:Switzerland’s tax authorities, under pressure from a growing United States investigation into the Swiss bank giant UBS, are expected to hand over confidential data on wealthy American clients of UBS to the Justice Department, two people briefed on the matter said Tuesday.

The move would represent a significant shift in Switzerland’s banking secrecy laws, whose tradition dates to the Middle Ages.

UBS began handing over data on hundreds of American clients with offshore private banking accounts to the Swiss taxing authority starting in August, these people said.

The delivery to the Justice Department, expected to take place within several months, would place American client names in the hands of federal prosecutors seeking to build criminal cases against wealthy Americans they suspect of tax evasion.

The full story is available here. Of course, nothing surprising new here as I already wrote about this here.

In the US, Wachovia went down today. National City is headed south too. Oddly, the USD increased against the EUR.

The British Chancellor stated that the taxpayers will not have to pay the “entire” cost of the bankruptcy of Bradford and Bingley. Interesting, and perhaps reassuring, to note that their Isle of Man operations were also bailed out by the UK taxpayer.

Hypo stayed on in there to fight for another day. More details of the Fortis bailout by the governments of Netherlands, Belgium and Luxembourg emerged. Fortis have major operations in Luxembourg (the former Banque Generale du Luxembourg or BGL, where I used to open accounts for clients years ago…) so this may rank as the first major “offshore” bank failure. Most likely not the last.

Gold shot up again today. Again, not unexpected. I repeat my advice to buy physical gold bullion coins if possible.

I’m losing count now, but I think these are respectively the sixth and seventh US banks to fail this year. Well, technically they didn’t fail. What happened was in one fell swoop, the FDIC lost $862 million, and First National Bank of Nevada and First Heritage Bank NA of California will reopen on Monday as branches of Mutual of Omaha Bank.

Well,I don’t want to spoil your weekend. If you want to read more about the above, here’s the link.

If you want to do something about reducing your own exposure to US banks, here’s the link. 

If you want to visit Panama City in November and discuss this in person with like-minded individuals, and work out strategies to profit from the current chaos, here’s the link. 

Quite a number of our readers (about 30% I believe) are UK residents. Those who travel outside the UK will be interested to read this case, which  makes it much easier to sue your UK credit card company in the case of any problems overseas…

Specialist travel and tourism solicitor Andrew Morton at Manchester law firm Pannone LLP says a landmark decision from the House of Lords (Office of Fair Trading - v – Lloyds TSB Bank) means that tourists and other travellers abroad have had rights against their credit card companies confirmed, under Section 75 of the Consumer Credit Act 1974.

“The decision”, says Andrew Morton, “means that a traveller who pays for goods and services abroad by credit card has a direct route to compensation for injuries and other losses against his credit card company. This avoids the need for the traveller to pursue his/her claim against a foreign entity, for example a hotel, theme park or excursion provider, through the Court of that country. The right against the credit card company can be enforced here in the UK with the bank, in effect, stepping into the shoes of the supplier of the services.

New route to a remedy
“The growth in D.I.Y and bespoke packages means more holidays and trips abroad may not now be covered by the Package Travel Regulations 1992. Left to take action against a foreign company, the traveller often finds that this is not viable. This new route to a remedy takes away many of the difficulties that could see travellers being advised to leave action against the travel company aside in favour of a simpler remedy against their bank.

“For example, a traveller booking a hotel in Majorca by credit card who is injured by the negligence of the hotel or its staff can now sue his bank in England with no direct reference to the hotel itself”.

It should though be noted that this only applies to regulated credit card transactions where the value of the transaction falls between £100.00 and £30,000.00.

June 2nd is a special date for those UK readers who are in the unfortunate position of being onshore, resident taxpayers. June 2nd is the day you stop working for the government. For 155 days of the year, every penny earned by the average UK resident was taken to support government expenditures.

Tax Freedom Day shows just how long we spend working for the Treasury, rather than ourselves. Overall, the government takes more than 40% of national income. This means that the average UK resident has to work a full five months of the year solely to pay that tax bill.  Last year, that meant working from 1 January to 4 June – just to pay taxes! The 2008 Budget did little to change that. Assuming the Chancellor got his growth forecasts right, Tax Freedom Day 2008 will fall on June 2 (just one day earlier, since this is a leap year). And if you take government borrowing into account, Tax Freedom Day does not come until 14 June.

For much of the last few years, however, Tax Freedom Day has been coming later and later. In fact, it falls a full week later now than it did back in 2002. That is an extra week of working for the Chancellor. At this rate, it will not be long until we spend longer working for the government than we do working for ourselves.

Tax Freedom Day is calculated by taking the UK’s net national income and calculating how much of that is taken away in taxes. These taxes include not just income tax, but VAT, inheritance tax, stamp duty, car and fuel taxes, excise taxes on alcohol and cigarettes, taxes on companies and employment, and many more. For technical stuff about how Tax Freedom Day is calculated, click here.

The Adam Smith Institute has been calculating Tax Freedom Day since 1991 and has figures for it going back to 1963 – when Tax Freedom Day was more than a whole month earlier, falling on 24 April.