Putting the UK’s house in order

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I have already blogged a new report describing the shocking ease with which it is possible to create companies in the UK, published in the Economist and elsewhere today.

The report is timely. It is not a defence of tax haven behaviour. What it says is that the UK and USA are tax havens – and we are just about alone in the world the Tax Justice Network in doing this – critics please note.

What this report makes clear is that abuse is easy in the UK. It is something I have said for am long time – not just here but numerous times on the UK media.

It is absolutely essential that there is reform of company law in the UK as part of the whole process of writing down on abuse. In particular:

  1. The UK should ban the use of bearer shares, which are outlawed offshore but remain legal in this country.
  2. The true identities of the beneficial owners of all private companies should be put on public record. All trust arrangements should be' ‚Äò looked through’ and the names of beneficiaries and settlors provided. Anyone who acts as a nominee shareholder should declare it and state on whose behalf they act.
  3. Similarly, if anyone acts as a nominee director or company secretary then they must declare that fact and state the names of the persons on whose behalf they act. If they are accustomed to accept any form of instruction on a regular basis as to the exercise of their duty then the the name of the person giving them instruction should be put on public record.
  4. The current registered office arrangement for companies is open to abuse. It gives no indications of where a company actually trades. The main place of trading for every company that is on the register must be put on public record.
  5. Full accounts must be filed for all legal entities in the UK. Abbreviated accounts must be abolished. They are a characteristic of a secrecy jurisdiction.
  6. Trusts should be considered legal entities for this purpose. All trusts should be registered.
  7. The annual filing fee for a company, currently £15 a year, should be increased at least twenty fold with the funds being used to rigorously police the UK's register of companies, to make enquiry wherever there is doubt as to the accuracy of information on the register, to pursue those who do not file information on a timely basis, and to impose substantial, automatic penalties upon those who fail to file that data at the time that the offence occurs.
  8. The facility that allows companies to be struck off the register without ever having filed accounts or without ever having filed a corporation tax return must be abolished. It is a license for fraud and it is undoubtedly used for that purpose.

Lord Myners, Lord Mandelson and all who argue for tax haven reform: get the UK in order too. It will make us a more competitive economy if you do.