Facebook Under Fire

In this digital age, we disclose our likes and dislikes every day, all the time; loyalty cards, browsing on the internet, and going about our daily activities, monitored 24/7 by CCTV cameras. So, what is the big fuss with Facebook and Cambridge Analytica? The issue is not even current; it relates back to an event which happened in 2014.

Facebook makes revenue out of allowing third party developers, such as Cambridge Analytica, access to the data of millions of its users.  In 2014, the data of their members and their friends required less filtering than today. But what is relevant today is that we now know Cambridge Analytica used this data to help Trump into the White House.

For many who think Trump should not be President, the use of this information in this way is an outrage. Whether Facebook will be made to pay, however, will depend on the law at that time. Facebook was subject to an order made in 2011 not to share data with any third party without the express permission of the user. However, it neatly sidestepped this requirement with the use of irritating pop-ups.

One of the issues addressed in the EU initiative on General Data Protection Regulations is to stop these annoying pop-ups which won’t disappear until you have ticked the box which says ‘I have read and agree to the terms and conditions’. Under the new initiative, due to become law on 25th May, consent can only be meaningfully if ‘freely given’ which means that consent is asked for in ‘clear and plain’ language.

Under these new data protection regulations there are 6 principles

·      The data must be collected lawfully, fairly and transparently

·      It must be collected only for a specific legal purpose

·      It must be adequate, relevant and limited to what is necessary

·      It must be accurate and kept up to date

·      It must be stored only as long as is necessary, and

·      It must ensure appropriate security, integrity and confidentiality.

These regulations apply to all digital technology businesses, but do they apply to the information collected by Governments? Under the existing rules, if the primary purpose of collecting data is for the best interests of the security and well-being of the country’s residents as a whole, or for the purposes of collecting and administering tax then the data protection rules may not apply subject to proportionality.

Let’s put this in context: Ferdinand set up a trust in Jersey fifteen years ago, with the proceeds of the sale of his first business. He appointed a professional, reputable trustee and his brother in law as a Protector. He and his family are UK resident, non-UK domiciled, but Ferdinand spends a lot of his time in Central America where many of his businesses are based. His businesses have done well and now his trusts are worth many hundreds of £’s millions.

His Jersey trustees tell him that under CRS he is obliged to self-certify his tax residence. From records kept by his professional trustees, it is known that he lives with his family in the UK, but spends a lot of his time in Central America.

In order to fill out this form correctly, Ferdinand, asks a reputable firm of accountants in both the UK and Central America for a tax report as to whether he is tax resident, and if yes, is he fully up to date on all taxes.

The UK report made it clear that Ferdinand was UK resident but not liable for any taxes. However, the report from Central America, was uncertain as to his tax residence, but that if he were tax resident, no taxes were due. Ferdinand has given both reports to his Jersey trustees and they have reported accordingly.

Ferdinand is keen to restructure his trust to give him greater control and to put beyond doubt that he is not tax resident in Central America. However, he is concerned about the information which has already been collected and exchanged? Has he got a right to demand that the information ‘be forgotten’ and when? If he were to make such a request, would not serve to draw attention to himself?

In Article 17 there is a ‘right to erase’. But does this to apply to data collected under the CRS?

Common sense would argue that if it was reasonable to collect information, even when there was a ‘reasonable excuse’ to say that this information would not give rise to any further tax due, Ferdinand would have the right to demand that this information be erased within a reasonable period of time, if by then inaccurate or out of date or maybe not?

The answer will only emerge as a result of long and painful litigation. If you do not wish to be a test case – please contact …. to find out how you can maximise control and minimise exposure.

If you have comments or would like to discuss matters relating to restructuring, control, trusts and protection of your assets please contact us direct.

Contact :          svetlana@garnhamfos.com

                        020 3740 7423

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