The States of Guernsey has just announced an updated approach to tax avoidance, with the Policy & Resources Committee releasing a new action plan and revised guidance on how Section 67 of the Income Tax Law will be applied in practice. This marks a firmer stance on arrangements that may be legal on paper, but don't reflect the spirit of the law.

So, what does this mean for you — and do you need to take action?

What is Section 67?

Section 67 gives the Guernsey Revenue Service the power to adjust someone’s tax position if they’ve entered into an arrangement whose main purpose is to avoid tax — especially if that arrangement has no clear commercial justification.

The updated guidance confirms that ordinary, sensible business decisions are still perfectly acceptable. But schemes that are circular, artificial, or designed purely to avoid tax will come under scrutiny.

Examples include:

• Dressing up income as capital to avoid tax,

• Receiving tax-deductible payments which are returned in a tax-free form,

• Taking shareholder loans instead of dividends from investment companies,

• Structuring salary and pension arrangements to get around higher tax bands.

So, what's changed?

Not much — at least not for our clients.

Since the zero–ten corporate tax regime was introduced, we at Lince Salisbury have consistently advised clients to declare and pay tax on distributions made from companies holding untaxed profits. That approach has been at the heart of our guidance for more than a decade.

This updated legislation doesn't rewrite the rules — it simply puts into formal guidance what we've long treated as standard practice.

What should clients do now?

If you're a client of Lince Salisbury, chances are you've already followed this advice — whether recently or at some point in the last ten years. If there are changes that affect your situation in future, we’ll let you know. We're constantly monitoring legislative updates, and we continue to review client structures in line with best practice.

For some other firms, this change may require a shift in how they advise clients. For us, it’s business as usual. No sudden pivots. No fire drills. Just steady, proactive advice — as always.