The Guardian has reported that:
Offshore companies buying UK property could be forced to reveal their ultimate owners under plans being considered by ministers to crack down on tax evasion and money laundering.
The proposals would shine a spotlight on the foreign firms that hold billions of pounds in British property without having to declare who is behind them. It could also require foreign companies bidding for public sector contracts to do the same.
The first of these suggestions has been a long term aim that I have suggested many times; the second a more recent goal. Both have been strongly resisted and dismissed by those who describe themselves as right wing but who clearly have no interest in the creation of effective markets, the proper allication of capital or fair competition.
I welcome the moves. The next step is to ensure all such companies fully publish their UK accounts and are automatically deemed UK tax resident, at the very least by presuming their UK activities to be branch operation requiring full disclosure and proper corporation tax accounting. I see no reason why existing treaty and other arrangements should deny that possibility, but I am sure objections will be raised. This is, however, good news and a step in the right direction if ( and it is a big if) it happens and this is not just gesture politics before the London corruption summit on May 12.
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Oh to have some restriction on foreigners buying property full stop. I gather the Chinese house purchasing for investment / future homes for their children attending university has spread to Bath and Cambridge, and probably some other cities- all helping to fuel house prices and exclude ordinary members of the population achieving homeownership.
When the Land Registry sale takes place there will be a much higher paywall to access ownership anyway.
But deeming them to have a branch operation achieves nothing. Most of them have no rental income (and if they did then they are already currently subject to income tax at 20% but making them subject to corporation tax instead would see those same rental profits taxed at only 17% by 2020 instead of 20%). Capital gains are already now subject to 28%, but the same gains attributable to a branch would be subject to only 20% corporation tax falling to 17%.
Am I missing something?
No rent?
How about a benefit in kind?
Agreed, but that is the case already. The taxable benefit is quite logically assessed upon the beneficiary who is receiving the benefit. The company is the “payer” of the benefit in kind – it is not the beneficiary. It would therefore be a deemed expense of the company, resulting in a tax loss so no profits would be attributable to the deemed branch.
But i am sure we can change that
Sorry – just can’t see that happening.
Surely for a benefit in kind charge to arise the individual residing in the property must be either an employee or director of the company?
These will be close companies
Close company rules apply to shareholders.
Sorry but your suggestion just does not work on any practical or logical basis
So hang in
You are saying this person owns the company that owns the house that they live in but are not shareholder, employee or director
Nonsense
You’re describing a scam
I want to tax reality
If I could not I would be changing the law
I might have yo think about how
And how about those people who genuinely require confidentiality for security reasons? The use of an offshore company to buy London property is now not tax driven. CGT is payable on the sale of residential land, going forward gains will not be treaty protected by way of claiming no permanent establishment was created in the UK and such companies will no longer shelter the UK land from IHT.
So no tax advantages.
On the whole money laundering point, do you have any idea how difficult it is to open a bank account now if an offshore jurisdiction. Source of wealth and source of funds checks will catch the vast majority (one can never say all) of criminals trying to launder money.
Richard, you and your cronies on here are so obsessed with “what others have.” Face it, you are a bog standard accountant who has not been a success and you are JEALOUS of these people who can buy large London residential pads. If they choose to do this through an offshore company, trust, foundation, pension wrapper who cares now that there is no tax advantage to doing so.
You’re pathetic.
I am more than happy with the house I am moving to. Jealousy is something you may suffer, and if is likely to motivate you (go and do some reading and thinking) but your belief it does me is a projection of your own world view and is not an understanding if mine.
And your claim is nonsense. It would require that the owner if a prooerty did not go near it.
And it would require that they never at any time display their wealth.
These are ridiculous ideas
What I am interested in is fair competition, knowledge and consistent rules. These are the foundation of effective markets that benefit socity. Just read some economic theory. So I am pro market and you are not
No jealousy. Just sound logic and a dislike of abuse
Mark, I’m assuming that you are not stinking rich yourself, so I’d like to know what you so admire about those who are. Is it because they must have worked much, much harder than any of us? Or is it that you admire good luck above all else? In which case I guess you must have a belief that there’s a god who knows they are worthy.
Carol
erm, its because he works for them, or hopes to do so, & could never hope of getting any other form of employment.
Mark Greaves
I shall not & could not argue with you, since you forward no arguments.
It seems to me self-evident that, like many market ‘freedoms’, the freedom of wealthy people to purchase property in London makes everyone poorer. It is interesting that you genuinely cannot see why there is any reason, except for jealousy, why people should object to the wealthy pushing up house prices by buying up central London flats that they will leave mostly unoccupied at a time that the people who the capital needs-nurses, teachers, police & fire workers, could not dream of even renting in London.
Still, I’m happy in Birmingham so I partly think “do what you will”. Its odd that, back in the day, I was enticed by London as a place where dreams happened. It was so wild, bohemian & romantic. Those days really are long gone aren’t they?
They havent gone at all lots of people go to London for work, to party and to live. Its hasnt changed at all and will continue to do so after we have long gone. I appreciate there were times in history, three day week and during the war when people didnt feel the same way. But today right here right now, London is still the place to go to.
You have got old and want a quieter life.
I would say that you might be in correct with Birmingham. Thats the next happening place. HS2 , HSBC moving some people there and London prices.
Give me somewhere a lot smaller….
I am a property developer myself and see no reason why people should know what companies I am an ultimate owner of. The companies pay their taxes and employ staff. I see no reason why the true owner needs to be revealed? I have nothing to hide but on the flip side respect the confidentiality that comes from owning land via a company.
My point is that Richard and his cronies automatically associate an offshore company with tax evasion and money laundering. I’m saying this is the case in the minority of situations, not the norm. To take away the basic advantage of confidentiality for those people who require or want it for their own reasons is unreasonable.
But then, I am quite sure you enjoy the unfair competitive advantage not disclosing who you are provides
And I am thinking of those who lose out as a result
What advantage do I get over others?
The fact that they have no idea who they are competing with
The fact that you can bid against yourself and no one would know
Bid against myself? Why? It doesn’t even make sense.
Also the decision to sell the property lies with the vendor. All I can do is make an offer and see if accepted. Even if i used 100 different companies all with my identities hidden I cannot compel a vendor to sell unless they feel they are getting the right price.
Your arguments have no substance.
Why don’t you just admit the real reason is because you just want to know what everyone else has?
With the greatest of respect, even the accountant who argued in favour of secrecy in debate with me on Radio 4 recently suggested the main reason for it was to disguise competing bids
I happen to be right: secrecy is used to rig markets. You may not do it, but others do
And your suggestion as to reasons is simply indication if your own politics, motivations and opinions, but not mine. Read some Veblen, I suggest