James Turner, Director at Turner Little and an expert in offshore companies and Trusts, believes the UK’s regulation is driving high net worth individuals to leave the UK in a max exodus.
The UK Government and HM Revenue and Customs are failing individuals when it comes to their right to privacy, family life and their data through regulation and legislation on Beneficial Ownership Registers.
At a time when our country should be looking to maximise the opportunities that Brexit was supposed to deliver and cut the red tape, we are instead enacting laws that are making investment and wealth disappear. In fact, the UK now has some of the most draconian laws in the world when it comes to asset and company ownership.
For those individuals who own offshore companies or who have implemented offshore Trusts or Foundations, the regulation now in many cases that these must be dual registered in the UK is unnecessary and is counterproductive.
Those of us who are bound by the regulation – solicitors, accountants, TCSPs (Trust or Company Service Providers), and those who fall under the FCA remit – are bound to report and register the offshore companies transacting on property in the UK and Overseas Trusts where the UK Agent who created that Overseas Trust continues to transact with the Trustees overseas. The way the regulation has been developed means that we become responsible for acting as a policeman against our clients and associates. We are simply a pawn in doing the job of HMRC.
All of this is counterproductive. Along with significant tax hikes as announced in the Autumn Budget 2022, the UK is becoming a country where any high or ultra-high net worth individual will no longer want to be a resident. This will result in a mass exodus to other, more favourable countries, which in turn results in less tax for our country.
Even the EU, which is known to love red tape, has just had similar regulation overturned by the European Court of Justice.
The judgement looked at the lawfulness of public access to the beneficial ownership registers which were mandated under EU anti-money laundering directives. The ECJ ruled that granting public access to the identity and personal data of beneficial owners would infringe the right to respect for private and family life, and the right to the protection of personal data enshrined respectively in Articles 7 and 8 of the Charter of Fundamental Rights of the European Union.
EU states have now started to remove the public registers of beneficial ownership of companies in light of this ruling, for example The Republic of Cyprus, which has already suspended the UBO register.
While the regulation remains, those of us who are acting in an advisory capacity to individuals have little room to manoeuvre unless the UK decides to change its stance; though it is worth noting they are no longer bound to adhere to the ruling. There are some options open to companies like ours in how best to provide a service around offshore companies and trusts. We are now well advanced in developing an alternative service and route for our clients.
In the first instance, our experts can work with you to explore options to tailor a bespoke package that delivers for you. This includes exploring countries that offer low tax, appropriate legislation and reputable jurisdiction, as well as helping our current and future clients navigate the complex situation around company registration, Trusts and Foundations and privacy.
For more information, please contact our experts here.