When UK.gov asks 'Who's your daddy', companies HAD BETTER reply
HMRC will be able to access details of firms' beneficial owners
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 owners' to a central registry maintained by Companies House. The Government said that this would address the current "lack of clarity" about who really owns, controls and benefits from companies.
The Government will consult on the detail of the new rules, including whether the new register of beneficial ownership should be made publicly available, this summer.
"A company should know who ultimately owns and controls it - its beneficial owners – and it is essential that law enforcement and tax authorities have access to that information," said George Osborne, Chancellor of the Exchequer. "These commitments demonstrate the concrete action we are taking ourselves but it is vital that we take collective international action through the G8 to tackle the international challenges of tax evasion, money laundering and illicit finance."
Leaders of the other countries that make up the G8 group of the world's largest economies are expected to commit to setting out the steps they will take to increase transparency in relation to beneficial ownership among the announcements to emerge from this week's summit, according to the UK Government. Prime Minister David Cameron has previously announced tax as one of his three priorities for the UK's presidency of the group, alongside trade and transparency.
All of the British Overseas Territories and Crown Dependencies have also committed to tougher action on tax evasion and avoidance ahead of the summit, including the publication of their own beneficial ownership action plans. Representatives from territories including Jersey, Guernsey, the British Virgin Islands, Cayman Islands and Bermuda agreed to sign the Multilateral Convention on Mutual Assistance in Tax Matters, which is overseen by the Organisation for Economic Cooperation and Development (OECD), at a meeting in London.
Last week the EU proposed stronger automatic tax information exchange arrangements for member states, modelled on the Foreign Accounts Tax Compliance Act (FATCA) between the US and its trade partners. EU laws already permit the automatic exchange of certain information between member states, but the new proposals will extend the regime to cover additional types of income.
Tax expert Phil Berwick of Pinsent Masons, the law firm behind Out-Law.com, said that the UK's drive to create a register of the beneficial owners of companies was a "clear statement of intent in the ongoing global battle against tax evasion".
"Various initiatives over the last few years have made the world a smaller place for those seeking to keep out of the clutches of the authorities," he said. "This will make the world an even smaller place."
"A register of beneficial ownership would have a significant impact on the war against those suspected of tax evasion and aggressive tax avoidance. However, the Government needs to recognise that it is not illegal to have an offshore structure, and there are reasons other than tax evasion why someone may have such a structure," he said.
Copyright © 2013, Out-Law.com
Out-Law.com is part of international law firm Pinsent Masons.
* The person or entity to whom the property rights - and hence profits - ultimately flow, the one who enjoys the "benefits of ownership" even though the title may be in another name.