George Osborne has said he's going to stop stamp duty avoidance though the use of offshore limited companies tomorrow. And so he should. According to some reports The Land Registry has calculated that in the past 12 years a total of 94,760 properties have effectively been placed offshore and beyond the reach of the taxman.
Now Osborne says he's going to tackle this issue to collect stamp duty. What interests me just as much is the crime these registrations hide.
There will be money laundering hidden in these properties.
And massive tax evasion.
And the abuse of the people of developing countries.
As well as straightforward theft in the UK.
Osborne says he's going to come down hard on all such property owners. So is he really going to do what has always been essential - and demand that the beneficial ownership of the companies that own all these properties be properly recorded?
And when he finds out who owns them - will he then be prosecuting the money launderers, the tax cheats, the foreign kleptocrats and the lawyers who handled the deals and did not report their suspicions but should have done under money laundering laws? I really hope so. There might be many a sweaty palm right now on this one - especially amongst the lawyers.
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i have already said a mandatory land registration should be done . ive got an epetition for it.
Good grief – this is Osborne you’re talking about! It’s ‘money launderers, the tax cheats, the foreign kleptocrats’ who clubbed together to get him put in as chancellor! He won’t be doing anything to upset them! Expect something cosmetic at best.
As you would know the HMRC (under Labour) went through an exercise of investigating properties held in structures some years ago (around 2003/4 from memory). I guess Osborne wants to take this further which I think is a great idea.
If the Daily Mail are to be believed over 23,000 properties registered since 1999 are owned by companies in 122 difference locations around the world. Isle of Man was named as the most popular with US, Uganda, Libya, Ireland, Germany & Holland also popular.
There is a good case to be made for reducing stamp duty to the amount neccessary to cover the costs of altering the entries in the Land Registry – less than a few hundred pounds. There is also a good case to be made for compulsory land registration.
SD is not a reliable source of revenue. It gums up the property market and revenues drop when the number of transactions drops.
The revenue should be raised instead by an annual tax tied to the property title. If the title is held by an offshore company, the tax liability then remains if the title is to remain valid. If the offshore company persistently declines to pay, then the title would have to be considered to have lapsed.
This proposal is so obvious that the Chancellor’s failure to implement it is strong evidence of a fundamental bad faith and dishonesty.
Indeed. The Land Registry is still only 75% complete – since its creation 150 years ago. It is a democratic right that the British people should know who owns the land which is their common birthright. We’ve been thinking of ways to stimulate demand for this information. Perhaps a campaign to apply under the Freedom of Information Act for knowledge of the owners of certain large estates. Perhaps Kevin Cahill (author of Who Owns Britain? 2003) could give us a lead.
I think that’s a good point Henry.
Of course it is nonsense to say that all properties held in corporate vehicles are ultimately owned by “money launderers, the tax cheats, (and) foreign kleptocrats. If I live outside the UK and want to buy a house in London, and if I buy it in my own name then 40% inheritance tax will be payable on my death. Now Richard will argue that it is unacceptable that people try to avoid this, but it does not follow that they are necessarily foreign keptocrats.
It is interesting that this whole debate appears to be about ultra high net worth individuals buying houses in London. The real SDLT avoiders using these structures are of course the institutions – pension funds, property investment funds etc – who hold commercial and industrial properties in the names of companies. And the figures dwarf those relating to residential property.
You’re tax avoiding through an artificial structure
That makes you a tax cheat
I rest my case. You admitted your crime in your own evidence
so what about foreign residents who hold UK shares not in their own name but through an investment company. I suppose they are tax cheats as well. How would you propose HMRC should proceed to ensure that they too pay their fair share of Inheritance Tax?
By requiring declaration of beneficial ownership
It’s not a crime. You are lying. Owning a property through an offshore company is not a crime. You should withdraw your comment.
But many of those ownerships through offshore companies do hide crimes
That is what I said
are you suggesting that overseas holders of quoted UK securities should pay 40% tax on their holdings on their death? That’s pretty strong stuff!
Oh you mean upholding the law is strong stuff?
It never occurred to most of us to think so
Only criminals think that way, I suspect
The UK could do worse than adopt the French system of taxing properties held through corporate structures. There, an annual tax of 3% is due of the current market value of the property if the property is held through a corporate structure and can only be avoided if the beneficial ownership of the structure is declared. That declaration, of course, puts the beneficial owner in the scope of French wealth tax.
In my experience it is very tough to avoid that tax unless you resort to outright fraudulent declarations.
I suspect this is where we are going – but will look for details later
I live outside the UK but own a property in the UK. It seems reasonable to me that the ongoing validity of the title should be conditional on my payment of all UK taxes on that property and that it should be subject to UK inheritance tax laws. It seems perverse that I could, if I could be bothered, put it into the ownership of an offshore company and thereby avoid UK tax. Frankly there are better things to do in life that fiddle UK taxes through dodgy dealings, and I have no intention of trying to avoid Swedish taxes as you get good value for your money and there is not much to complain about on that score.
Property in other jurisdictions should be subject to the rules of those jurisdictions. That seems straightforward.