There is no legal definition of an offshore centre but of the traditional centres there are at least 35. Some would argue that the UK is a major offshore centre given the favourable tax treatment of non-domiciled individuals. Offshore centres developed by offering tax efficient structures and investments to individuals and companies located in other countries. As tax planning opportunities for individuals have been reduced so offshore centres have sought to develop themselves as attractive jurisdictions for funds and corporate structures while continuing to remain centres for asset protection and succession planning.

There is not enough room here to compare the merits of offshore centres in detail. Your wealth manager, however, will have favoured centres depending on the structures and investments you are making. Popular jurisdictions for trusts and companies include Jersey, the British Virgin Islands and Guernsey while Luxembourg and Dublin have major funds centres. The Cayman Islands and Bermuda are popular for hedge funds. Other centres to feature prominently are the Isle of Man, the Bahamas and Guernsey.

There can be significant differences between centres, as illustrated by the “exclusion of foreign law” legislation discussed above. Some centres are regarded as being more stringently regulated than others. Among the other factors to consider when choosing a trust centre is the extent of case law in the local courts and the depth of expertise among the relevant trust and advisory professionals. You may also want to choose a centre close to the UK for ease of communication.

Regulatory problems do occur in offshore centres, as they do in the UK. The key is the relationship you have with your wealth manager, their experience, qualifications and regulatory status as well as those of any institutions with which you invest in offshore centres.