can force changes in Jersey's tax law. Changes to Jersey law mandated by Britain "simply cannot and will not happen,'' said Jersey's chief finance minister, Frank Walker.

"Our basic fiscal structure was established in 1940 and has remained essentially unchanged for six decades,'' Mr. Walker added.

It has been assumed that all British possessions, including Crown dependencies such as Jersey and Overseas Territories such as Bermuda, would automatically do as they were told by the mother country.

Jersey was one of four jurisdictions named by the British Government in October as offering "designer tax rates'' to attract capital away from the UK. The British Government issued a crackdown order on the four and said that companies using Jersey's designer tax rates, which allow companies to establish their own tax, would be penalised.

The question of legal changes made in London and exported by fiat to the Overseas Territories is of great importance in many of the Caribbean countries, where homosexuality is illegal.

Britain indicated in its March, 1999 White Paper on the future of the Overseas Territories that such discrimination would no longer be permitted and that legislation would be passed in the UK to be applied in those Overseas Territories which did not change their own laws. Now Jersey has thrown that assumption into doubt.

Bermuda has already legalised homosexuality and Governor Thorold Masefield indicated in his Throne Speech last month that hanging and flogging would be voluntarily abolished by the Bermuda Government, rather than by London sending law to Bermuda's House of Assembly.

In Jersey, one report described the Jersey Government as "incensed'' that Britain would adopt so heavy-handed an approach to Jersey's taxation.

"There are only a few UK businesses using the so-called designer rate tax regimes and they have a minimal effect on our tax revenue,'' said Colin Powell, Jersey's newly-appointed Financial Services Committee chairman.

"If as has been alleged, the Treasury is hoping to recoup 1 billion ($1.6 billion), it certainly won't be from us,'' Mr. Powell added.

Meanwhile, three Crown Dependencies -- Jersey, Guernsey and the Isle of Man -- have commissioned another comprehensive review of their anti money-laundering legislation, this one by the Offshore Group of Banking Supervisors. They measured the three countries' compliance with the standards issued by the Financial Action Task Force against money-laundering.

The results of the report will not be made public, but may be used by the government of Jersey to strengthen their case with the UK.