We all know that we are living in difficult economic times – a glance at one of the many depressing headlines (even when the news is comparatively good) is enough to make the most cheerful optimist feel down hearted. The fall out from this has been interesting. To be “rich” is no longer fashionable (although “brands” do not appear to be suffering); anyone who tries to keep his or her affairs confidential is not being transparent and anyone who has an offshore account is trying to avoid tax…of course, this is not the reality at all.

Attacks on wealth can come from a variety of sources, and so wealthy individuals are often discreet for a number of reasons. Entrepreneurs and their families are used to challenges by creditors, divorcing spouses or other family members, but there is a trend for even the most compliant individuals to express increased concern about governmental challenges, whether through tax or otherwise. Recent events have not necessarily given them confidence that they will be dealt with “fairly”. In countries which do not have a well developed and stable political system, then the risks are greater. Not only may the wealthy entrepreneur fall foul of the government of the day, but civil unrest leading to a regime change could result in him losing all his assets. Spreading assets through the family may help to reduce the risk but that leads to other problems and is not a complete answer.

Two recent examples show how capricious government and public opinion can be when it comes to safeguarding assets according to well established principles of law.. First, the seizing of some assets held in Cypriot banks. This has made a number of people concerned about the quality of not only the banks where they put their money (a commercial risk, which can be assessed in the normal way) but also about the jurisdiction where the bank is located. Cyprus is part of the EU, and an outsider might well have thought that it follows that it would be well regulated and follow a predictable rule of law. A second example is the way in which the CEO of Google was castigated for saying that his company paid all the taxes it was legally obliged to pay. There has been a similar reaction to other companies, such as Starbucks – with Stephen Williams MP (who sits on the Public Accounts Select Committee) saying ” …Tax is something that is a legal obligation that you should pay…”, completely ignoring the fact that in that case Starbucks was doing precisely that. It is for Parliament to legislate and for taxpayers to comply with that legislation – not to second guess what laws Parliament would have liked to have imposed.

So, are wealthy people moving their funds to offshore jurisdictions in the hope that onshore revenue authorities will not be able to impose tax on them? This has not been my experience. Many offshore jurisdictions now have extensive networks of information exchange agreements and double tax treaties and apply the EU Savings Directive in appropriate cases (so that either a withholding tax is applied to savings income, or there is full disclosure). Switzerland and Singapore (both well established banking centres) either have signed or are shortly signing up to agreements which will result in greater disclosure of information with a number of countries, including the UK, US and Germany.

In the wake of the G8 meeting it has emerged that Britain’s offshore centres are committed to tackling tax evasion, and there will be registers of beneficial ownership. Increased transparency will make it harder to hide profits, although the “problem” (at least in some cases) would appear to be not that profits are hidden, but that there is no law which imposes a tax liability on them. And presumably this is only a problem for those who want to spend the money which would be raised through additional taxation. It is questionable whether this new commitment will result in increased tax in the developed jurisdictions: the Liechtenstein Disclosure Facility (which has been in place for about 3 years, and which is very favourable to previously non-compliant taxpayers) has yielded under £500 million, although HMRC assert that it will yield £3billion by 2016.

Two recent high profile tax cases – Dolce & Gabbana and Lionel Messi – have highlighted the difference in tax rates between jurisdictions, but both these cases involve allegations of fraud. Fraud is by no means confined to those with offshore accounts, companies and trusts.

For those with a low political profile, it is worth considering whether to obtain residency rights in a country with a more secure political system and with a wide range of visa treaties. There are a number of attractive countries in this category – St Kitts & Nevis being one of the cheapest, but perhaps not quite as robust as others, such as the UK where, for a relatively modest investment of £1 million, residency and (after a period of time) citizenship can, effectively, be bought. Other European countries (including Switzerland and Cyprus) offer similar programmes. This may not give full protection to both the individual and his wealth because it may raise the amount of tax payable. Another option is to be a tax nomad, but there are very few people for whom this way of life is attractive

Is it likely that the present “anti -rich, anti-tax haven” approach will result in fewer attempts to mitigate tax and an increased tax take from the wealthiest 1% of individuals? There is little hard data available, but I suspect that there will just be an increased burden on the compliant squeezed middle, with those who are determined to pay as little tax as possible continuing to do so, either legally or illegally, probably whilst banking and investing in the very countries which are putting pressure on the offshore jurisdictions.

Catriona Syed is a Partner in the Private Client team at Charles Russell LLP