Global push towards beneficial ownership disclosure

Beneficial ownership has become an increasingly hot topic in recent months and the Panama Papers leak has pushed this to the top of the agenda for both the UK government and other global jurisdictions. A number of initiatives are now already in place or are being consulted on, to ensure a move towards greater tax transparency across the globe.

Crown Dependencies and Overseas Territories enter beneficial ownership disclosure agreement

It was announced by the Prime Minister on 11 April 2016, prompted by the release of the Panama Papers, that an agreement had been reached between the UK and the Crown Dependencies and Overseas Territories to disclose information on company beneficial ownership to UK law enforcement and tax agencies. This agreement represents a significant step towards achieving the government’s plan for implementing the G20 principles on transparency of beneficial ownership.

32 countries now signed up for beneficial ownership information exchange pilot

On 14 April 2016, finance ministers from the UK, Germany, France, Italy and Spain launched a pilot to exchange data on company beneficial ownership registers and new registers of trusts, between tax and law enforcement agencies. One week later a further 27 countries had signed up, including the Crown Dependencies and Overseas Territories.  The pilot will look at the most effective way for countries to share information on the ultimate owners of companies and trusts, with the aim of developing a process whereby the national registries of member states can be interlinked.

The joint statement, signed by all countries entering the pilot, makes clear their intentions clear:

‘As recent events have shown we need to take firm collective action on increasing beneficial ownership transparency, building on our actions to date. Criminals continue to find ways to exploit the cracks in the current system, setting up complex structures in various and often multiple locations to hide their activities, be it money laundering, tax evasion or illicit finance. As with tax evasion, this requires a global response.

On beneficial ownership, it is essential to apply enhanced standards of transparency at European and international level. In this spirit, we have committed to establishing as soon as possible registers or other mechanisms requiring that beneficial owners of companies, trusts, foundations, shell companies and other relevant entities and arrangements are identified and available for tax administration and law enforcement authorities. We call on all other Member States, countries and jurisdictions to do so.’

Beneficial ownership of UK property

Alongside the other initiatives being undertaken to move towards greater tax transparency, a further consultation has recently closed on the requirements for certain overseas companies to provide beneficial ownership information before being allowed to purchase UK property in England and Wales.

The consultation considers the following:

  • The benefits of expanding the beneficial ownership disclosure requirements to some overseas companies (and why land and property is being prioritised);
  • What the government’s enforcement options might be for overseas companies (including restricting the sale or charge over an asset); and
  • Whether 100,000 existing overseas owners of property should be subject to the same requirements.

If government plans are approved, details would be placed on a register that is expected to be publicly accessible. Overseas companies looking to purchase or sell property in the UK would only be able to do if listed on the register.  From June 2016, all companies incorporated in the UK will be required to reveal their beneficial owners to Companies House.

Gabelle can offer technical and strategic advice in relation to offshore structures and the individuals involved, from experts within our international, owner managed business and tax investigations teams. We can review structures and advise on disclosures to HMRC where appropriate.  If you or your client requires further advice please call TaxDesk on 0845 4900509 and ask for Isobel Clift.