Most would agree that the government needs to understand the movement of monies through the UK so that it can crack down on criminal activity and also collect the right amount of tax but it is highly questionable whether the wider public should have access to this data.
Let’s put this in context. As a result of changes in tax rules since April 2017, there are now limited tax reasons for holding UK residential property through an offshore company. This may well become the case for all property in the future.
So, while tax avoidance using offshore companies for UK property has largely been addressed, the government remains concerned that criminal monies can still be funnelled through offshore companies to acquire UK real estate, which is often seen as a safe haven for funds. Rightly, the government is seeking to protect the integrity and reputation of the UK property market. The government’s plan, therefore, is to require all overseas companies owning UK property to disclose the identities of their ultimate beneficial owners. The government will record this on the ‘world-first public register’ of such data.
What is extremely concerning is the inference in the government’s announcement that this register will be publicly available. The use of offshore companies to acquire property in the UK is not solely for tax, or even criminal, reasons. Celebrities not wanting a stream of paparazzi camped outside their house, those with wealth, who perhaps live in politically unstable countries under fear of kidnapping and attack, vulnerable persons and a wide range of politically exposed individuals would all prefer not to have the precise location of their home in the UK revealed. The UK already suffers from title theft where fraudsters assume false identities to pass off as property owners, enabling them to offer security for a loan or sell the property to third parties.
We all value privacy. While the government is right to seek to clamp down on tax evasion and criminal activity, a public register which reveals highly confidential information is not the way the way to go about it. Such a register will drive those seeking security for themselves and their families, to invest their monies elsewhere in the world, where this can still be achieved. 𠊋y all means have a register, accessible to specified authorities, but there seems to be no justification for handing the criminal underworld a new set of data for them to find their victims.
Gary Heynes is head of Private Client at RSM