How criminals could abuse UK companies

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I’ve been asked why the UK can’t secure the data it needs to comply with the information exchange demands of Tax Information Exchange Agreements. I’ve also noted what Robert Morgenthau has had to say about abuse of US corporations. So let me take a simple example 

Suppose I buy a UK ‚Äòoff the shelf company’ from a formation agent. It’s a pretty easy thing to do.

They send me the forms to register the new shareholders

I may or may not complete them: I probably won’t. The company now has no recorded owners. I suspect this true of the vast majority of small companies in the UK, at least until their first annual return is filed 21 months after incorporation.

I might register the company at a false or nominee address (for example, somewhere offering a postal forwarding service). I may do so in a false name. As the only data that is checked with regard to any of this is that the postcode is real (but not that it is valid) that is easy to do.

I may have (quite easily) provided a false name as a director - no one ever checks.

I can still open a bank account. Banks do not seem to do company searches. The inconsistencies will not matter to them.

And HMRC will not now know where to find me - or who owns the company - and their enquiries will go unanswered.

After 21 months when the first accounts are due I ditch the company - maybe changing its name whilst transferring the original name to a now company, where I repeat the process. I forget to tell the bank about the change of identity and continue to use the bank account I now have with that new company.

Now maybe you might say I have the mind of a fraudster - but I see no way the UK can stop the above at present, and it would be easy to do.

And if I used an Eastern European bank account, which seem readily available, then this would became so easy it would be ridiculous.

My point is this: the UK is a great tax haven, one of the easiest places on earth to open a bank account and has about the laxest regulation there is.

And you still don’t believe me? Consider this: more than 100,000 companies are struck off the UK register of companies a year with no questions asked, many having never filled a set of accounts. Why do we let that happen? Isn’t this laxness one of the biggest recipes for fraud and abuse ever created? And we do it here in the UK.