As published on theguardian.com, Monday 30 January, 2023.
Thousands of offshore companies with UK properties are still not publicly declaring their ultimate owners because they are controlled by secretive trusts, new data shows.
About 18,000 companies have so far registered with the government’s new register of overseas entities, which was brought in to improve transparency about offshore property ownership. The deadline to sign up is this Tuesday.
However, at least 2,400 companies with UK property still do not reveal their beneficial owners because they are trusts based offshore.
The government gave an exemption to trusts when it brought in the public register, although the owners will have to give their details privately, which will be available to HMRC.
About 5,800 of the beneficial owners so far – about a third – are named as companies rather than individuals, with at least 2,412 of these appearing as trusts with no public information on the register about who is behind them.
The Guardian reported on Friday that more than 20 Conservative donors, and a string of billionaire businessmen are among those who have so far declared they own UK property through offshore jurisdictions.
It shows that wealthy businessmen, Gulf royalty and states such as China have legally bought up billions of pounds of mostly London property, often via jurisdictions such as the British Virgin Islands (BVI) and the Channel Islands.
Stephen Abbott Pugh, head of technology for Open Ownership, a non-governmental organisation focused on beneficial ownership transparency, said the fact that so many of the offshore companies are declared as owned by other companies or trusts means “the public still aren’t able to easily discover the people behind those companies in many cases”.
“With access to many European beneficial ownership registers being shut off following a 2022 court ruling, the Register of Overseas Entities shows how useful public data is for tracking how offshore money is used to buy assets,” he said.
Ray McCann, a former president of the Chartered Institute of Taxation and a former senior inspector at HMRC, said that owning property via an offshore entity no longer offers the same level of tax advantage in most cases, due to changes in the law.
However, he said that overseas ownership may have delivered a tax saving in the past, while there could be “greater scope for abuse” if offshore companies were themselves owned by another offshore entity like a trust.
“I don’t think it beyond the imagination of some to devise schemes that are intended to side step the rules,” he said.
Offshore companies with UK property are meant to make declarations to the register by 31 January.
However, as of noon on Sunday the Companies House register listed only 18,493 out of an estimated 32,000 have made declarations with just two days to go, suggesting there may be a last-minute rush to register and also a degree of noncompliance.
By Sunday close to a third of the overseas entities registered are incorporated in the British Virgin Islands (30.1%), one in five in Jersey and a further 12% in the Isle of Man. Close to three-quarters are based in one of these three jurisdictions, Guernsey or Luxembourg.
Those who have declared their beneficial ownership of offshore companies with UK properties have all complied with their legal obligations to reveal their identities.
The Guardian believes there is a public interest in reporting on the business interests and property ownership structures of wealthy, politically connected and influential people.
Holding properties through offshore companies is legal and some individuals may have genuine and legitimate privacy or security concerns or business reasons for using them. Experts say it can be done to minimise an individual’s tax liability as the owner or buyer of a property or, until now, to allow a property to be held anonymously. Some investors also cite the stability of the tax regime in jurisdictions such as Jersey and Guernsey as a reason their companies are based there, or they may live abroad.