Tax authorities and law enforcement agencies are to be able to access information about the owners of UK-registered companies under new rules proposed by the government. The new rules, announced ahead of this week's G8 summit in Fermanagh, Northern Ireland, will see companies required to supply information on their 'beneficial …
I wonder if this will really cover all companies, or will there be a get out clause for the accountants' and solicitors' favourite LLP vehicle, where limited liability might legally cloud the issue of who the ultimate beneficial owner actually is. And what about blind trusts?
Still, if Cameron and HMRC have the balls to really deliver (and the Hartnett/Vodafone/Goldmans debacle doesn't bode well), then it's a step in the right direction, and there will be some interesting court cases on the way.
most blind trusts are about the recipient of the money not knowing where exactly the trust money is stashed, so the recipient would have to work backwards from any given company to find if they "owned" it. But the major point against your concern would be that the register is not intended for public viewing. (might not stop the odd newspaper but everything seems to leak somewhere)
Can't see this impacting LLP's the government has gone very quiet on them lately. Even Vince who previously seemed determined to do something.
Private Eye has done some good coverage lately on them and the current situation is insane with Britain happy to provide a clean veneer no questions asked to anyone dodgy with a bit of cash. The almost total lack of oversite is scary with no one examining whatever dodgy accounts they choose to file if any.
" the register is not intended for public viewing."
Apparently one of the points up for discussion is that it might be, just as much company information is publicly available from current Companies House and/or FSA registers.
The point is though, it only needs one country to not sign up, and then the trail of beneficial owners will end at an ultimate beneficial owner company registered in a country that does not provide this information. So the immediate benefit will be limited and multinationals will still be able to hide away important details.
I guess that maybe 20-30 years down the line, countries that don't disclose this information would become pariah states much as tax havens are slowly becoming, bt it will take a while.
In the meantime, this is a GREAT step in the right direction.
Would be nice if they could fix Companies' House first.
Companies House is probably the most useless organisation I have ever come across. They take zero responsibility in the quality of what they store - if someone filed a fraudulent change they will record it. regardless of being warned fraud is in progress. It is of no use whatsoever that filing a fraudulent change is a criminal offence, if you're a small company the chances of getting the police interested are zero unless you can get some press coverage.
Add to that that the bank quite willingly hands over your account contents to anyone who alleges to be owner after a fraudulent registration (*) and it's a recipe for disaster.
The criminal we were dealing also managed to pull another stunt: company A owner is company B. company B owner is company C. Company C owner is - yes- you saw that one coming - company A. Try assessing the assets of that one. and no, don't expect any *intelligence* from Companies House to spot that, which leaves me with a question: if nobody does any checking anyway, why not set up an automated system via the government gateway and sack the lot? Oh, I see. "Government" and "automated system", got it.
(*) at least the bank we were dealing with (at which point you discover what the Banking Ombudsman really is for: delay).
Re: Would be nice if they could fix Companies' House first.
Accounts have to be filed with HMRC as well as Companies House. It is well known that Companies House does not validate information on the millions of registered companies it holds, nor is it legally bound to do, other than on the basis that it is compliant in form with the extant Companies Acts. HMRC audit about one in seven companies on which they receive accounts every year.
The beneficial ownership of UK registered businesses should be public knowledge.
Re: Would be nice if they could fix Companies' House first.
I'm surprised there isn't personal liability on the part of the CH employees who proceeded with a change despite being told there was fraud in progress.
balls to deliver?
there's already lobbying to block this - by arguing, that if the "British" companies are made to do that, and others don't have to - this will put our bleeding / bleating companies at a "competitive disadvantage". With whom, I wonder, if the record's supposed to be only available to tax authorities?
anyways, I'm pretty sure the relevant companies have already come up with plans of action a few convenient steps ahead of any potential new legislation.
Nominees and Funds
Most (by no means all) of our big companies are listed on the stock exchange. That includes Private Equity, though not privately-held business such as (AFAIK) Lidls, nor partnerships like John Lewis or accountant and solicitor firms.
And who owns listed companies? Shareholders! But most of those shares are in funds: pension funds, mutual funds, investment vehicles, and the like. Even those whose beneficial owners are individuals are commonly held in nominee accounts: indeed, for shares held in a SIPP or an ISA there's no alternative.
In fact one might say, the whole history of our financial system has been working to distance owners from assets and obscure the relationships. That's a lot to reverse! Perhaps he really does want to finish the job NuLab started and pump up house prices to suck in ALL remaining assets in the productive economy?
Re: Nominees and Funds
The Companies Act (2006 and previous versions) allows for these to be interrogated via a 'section 793' notice which the nominee is legally obliged to respond to. This uncovers the beneficial owners, although there may be several hops along the way. The act further requires the results of such enquiries to be stored in a section 808 register for 6 years after they've been collected.
You usually only come into problems when you follow an ownership chain into a tax haven where they can ignore UK/European law. At this point, a lot of companies also include the requirement to report underlying beneficial holders in their articles, which hold the shareholder even when the companies act doesn't.
Seems odd - maybe a bit off
It seems strange that governments made up of politicians funded by rich people should take steps systematically to reduce the rich people's income. On the other hand, there's many a slip 'twixt cup and lip. How often in the past we have heard of politicians meeting at the G<integer of your choice> and voting to do something earth-shaking... which never happens at all. Consider, for instance, the promises about cancelling African debts made at Gleneagles in 2005 (and trumpeted as a huge triumph for Tony Blair). Turned out much of what was promised had already been promised before; and a great deal of it was never actually implemented. Promises are cheap, and summit meetings are the time for leaders to win some free publicity by making promises they never intend to keep. How easy it is to go home and say (if asked, which they mostly never are), "Oh, Congress wouldn't pass the necessary legislation" or whatever bullshit seems to serve.
Then again, what about Edward Snowden and his revelations about NSA spying? That got quite a lot of coverage, even in the tame US and British mainstream media. And now, we have this G8 nonsense AND a threat by Washington to get involved in Syria. Maybe those things'll squeeze Snowden right off the front pages, and in due course right out of the media. And then when he disappears, no one will care.
I'm not quite clear how this proposal is going to work. All companies, apparently, will have to tell the government "who really owns them". But do they know that themselves? Suppose Company X is owned by thousands of shareholders, some of which are shell companies owned by other shell companies... Can a company insist that its shareholders (if companies) tell it who their shareholders are, etc.? Sounds rather rum to me.
But it's quite clear what the general idea is. While the NSA, GCHQ, and perhaps Microsoft and Google make sure that the government knows everything there is to know about every citizen, under the new dispensation it will also know everything there is to know about every company.
Meanwhile, we will know less and less about it - until we know nothing at all except that we had better do what we are told if we know what's good for us.
Suppose Company X is owned by thousands of shareholders, some of which are shell companies owned by other shell companies... Can a company insist that its shareholders (if companies) tell it who their shareholders are, etc.? "
If those shareholding companies, parent companies or whatever are UK registered/based, then they will already have to disclose the requested information and all that may be joined up by the Govt. system (or not!!) The obvious and easy way out of this and keeping your interest in the UK company hidden is to buy via an offshore shell company. The UK company will declare the shell company but that company doesn't have to declare anything.
FFS - beneficial owners are generally the shareholders. Companies are simply going to print a list of shareholders.
Total waste of time.
IANAL, but as I understand it UK law still permits companies to issue bearer shares, which means the owner of a company is the person who physically possesses the shares at any one time. The opportunities for obfuscation of ownership are clear.
If it were me, I think I'd opt for the Robert Maxwell solution - have all my companies ending up in a family trust based in Lichtenstein.
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