The Independent has first rate report on money laundering using UK front companies this morning. The report itself is detailed and well worth reading: billions of dollars of criminal money look to have entered the 'clean money' system as a result of the scam used.
From my point of view what is interesting is that the ease of access to UK companies, and the light touch regulation of them by Companies House and HM Revenue & Customs is fundamental to this criminal abuse, which the Independent makes clear is happening in the UK precisely because we choose to have that approach on these issues.
This has been a recurring theme of my work. My latest report on it is here. It's my belief that money launderers are not the only criminals to benefit: tax evaders in the UK do so too, at a cost to this country of tens of billions a year precisely because millions of companies exist virtually outside the law in the UK.
For the sake of enforcing the law, sending tax returns to all companies, enforcing their submission, improving company registration requirements and (of course) employing the staff to ensure that these regulations are complied with we chose to forego enough income for the government to solve the NHS funding crisis. That, I stress, is a choice by the government because we need not tolerate this crime.
Which opens up another possibility. Should there be a crime of criminal neglect to collect tax due and payable, only applicable to ministers and senior HRC officials responsible for such failures? I am quite sure that this crime is knowingly committed right now. Why should we let those committing it get away with it?
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“Should there be a crime of criminal neglect to collect tax due and payable, only applicable to ministers and senior HRC officials responsible for such failures?”
Yes, yes, YES !!!
Should it be a strict liability offence? Would make an interesting complement to the proposals for failure to disclose offshore accounts, which would criminalise administrative errors by the poorest of economic migrants regardless of intent.
the problem is no enforcement companies are registered with minimal details, no checks are made
Isn’t there already such a crime? If HMRC and Ministers know that tax evasion is happening and do nothing about it, that makes them accessories after the fact. (I’m not a lawyer, perhaps one among your followers can advise.)
Steve, although what you say might seem logical, I feel bound to say that I don’t feel it would be a runner (though I speak as a former Employment Law practitioner, so would hope a more learned contribution from a Public Law practitioner might appear).
First of all, there are quite well-entrenched constraints on suing Ministers of the Crown, added to which your proposal implies a very wide, almost blanket, application of the sort that the Courts would be very loath to apply to Ministers, for fear of causing the machinery of Government to seize up (despite the earnest desire of much of the electorate to see the whole Cabinet, and most members of the Commons and Lords behind bars!)
Richard’s suggestion, by contrast, is for specific charge of criminal negligence (the point at which civil negligence passes over to criminal negligence on account of the flagrant, and damaging, nature of the injury caused – in this case, to good order and the well-being of our polity, and its economic operations.
As with any such claim, there needs to be established the threefold test of duty, breach and damage. Now, all of these COULD be established in a given setvof facts – Vodafone? – but only ex post facto. And there lies the difference between what you (and many people want) and what Richard suggests: for the blanket approach would not lie, (though the whole development of judicial review was motivated by concerns over the powers of an over-mighty state, such as you are voicing) where the specific offence and charge could, and probably would. A specific offence is the route to take.
Thanks Andrew
There is an important error in the story.
It says: “Under UK laws, companies can obscure the identity of their owners by using “nominee” directors — people who lend their names to a company without actually having anything to do with them. ”
This is entirely incorrect. There is no such concept as a “nominee director” under English law. A director of a company is responsible for the actions of that company. He or she will remain on the hook even if he claims he is a mere “nominee director” and someone else is running the company. Indeed anyone making such a claim is essentially admitting breach of a director’s fiduciary duties. (The person behind the scenes will be treated as a “shadow director”, and so also on the hook – with much the same liabilities as a director.)
So anyone who offers themselves as a “nominee director” in the UK is at best foolish, at worst fraudulent. Mystery to me why the Independent is letting people who provide such services get away with it.
I note you live in fantasy land
First they do not take responsibility
Second it is obvious why the Independent is letting them get away with it to anyone who knows anything about newspapers
No, it is not at all obvious why the Independent says that nominee directors are permitted under UK law when they are not. Defamation/libel considerations may mean a newspaper won’t want to suggest named individuals are guilty of a crime, but certainly don’t require newspapers to get the law wrong.
And I do not mean “responsible” in the abstract; I mean that if the company has been involved in fraud/money laundering then “nominee directors” should expect a visit from PC Plod, and any claim they were merely a “nominee” will be laughed at.
Rather than insulting me, you’d be better off spending your time asking why there isn’t an immediate investigation of anyone offering “nominee director” services.
Of course there should be such an investigation
But do have some sense about what newspapers can or cannot say
The Independent have done a great job here
Why not say so?
It’s for others to decide what law has now been complied with or not
Why not also admit that the paper has wisely allowed for that fact?
Why do you think a newspaper can’t say there’s no such thing as a “nominee director”?
Legal risk
That’s not right.
The statement “There is no concept in English company law of a “nominee director”” cannot possibly be defamatory.
The statement “X claims to be a nominee director, which means he is prima facie in breach of his fiduciary duties and disqualification proceedings should be instituted” could be defamatory.
The statement “Under UK laws, companies can obscure the identity of their owners by using “nominee” directors” is simply incorrect.
You are getting boring
Take it up with the Independent
Hi Richard
I thought you should be aware of this body – The Financial Services Trade and Investment Board, created in the 2013 Budget.
Government and Industry are now officially making policy together: http://www.fstib.com/news/fstib-delivers-boost-to-trade-and-investment/
Here is the page on the Government’s website: https://www.gov.uk/government/publications/financial-services-trade-and-investment-board-one-year-on
And their ‘achievements One Year On’ report. Makes ominous reading: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/299260/financial_services_trade_and_investment_board_one_year_on.pdf
Louise
The Financial Services Trade and Investment Board on Taxation: http://www.fstib.com/campaigns/investment-management/why-the-uk-for-investment-management/taxation/
I think it is fair to say this new hybrid body is likely to have a considerable influence on tax policy.
Another industry lobby to advance neoliberalism