Speaking today during his visit to Singapore the Prime Minister drew attention to the opportunities for crime and corruption that can exist when assets are held by companies whose ultimate ownership is not known. He suggested that a ‘new era of corporate transparency’ will be opened up in the UK by the provisions of the Small Business, Enterprise and Employment Act 2015 which, from next year, will require a UK company to maintain a register of people able to exercise significant control over it.
The Prime Minister stated that approximately 100,000 UK properties in England and Wales, worth £122 billion, are owned by offshore companies. He declared his intention of ‘finding ways to make property ownership by foreign companies much more transparent’ and stated that the government will consult on the best way forward.
He indicated that, as a first step, he has asked the Land Registry to publish this autumn data on land and property titles in England and Wales that are owned by foreign companies. The government will also consider the case for requiring any non-UK company wishing to bid on a contract with the UK government to make publically available details of its underlying ownership.
Clearly, the government’s plans are at a very early stage, and there will be opportunities to contribute to its consultation exercise in due course. In the meantime it is important to remember that, while no one would seek to defend money-laundering and corruption, there are many legitimate reasons why individuals (particularly non-UK resident or domiciled individuals) might hold UK property via an offshore company.
For many years this has had inheritance tax advantages for individuals domiciled outside the UK though, following changes in the Budget, this will cease to be the case from 6 April 2017. Even without those advantages, it may still provide a flexible means of passing assets down through families and sharing ownership amongst family members. In addition, company ownership has helped ensure the privacy of the individuals concerned and guarded against threats to their security.
It remains to be seen what precisely the government has in mind. Moore Stephens will be monitoring the situation and making representations to the government as appropriate.
For more information please contact your usual Moore Stephens tax advisor