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The Pandora Papers – Is transparency back on the agenda?

  • Legal Development 06 October 2021 06 October 2021
  • UK & Europe

  • UK Real Estate Insights

The so-called Pandora Papers are the latest in a long line of leaks that allow the public a glimpse into the opaque world of tax structuring of a number of world leaders, senior officials and the super-rich. Some of the most headline grabbing stories centre around how they acquire and hold property, in particular through the use of offshore trust arrangements.

The Pandora Papers – Is transparency back on the agenda?

We learned this week that more than 1,500 UK properties have been bought using offshore vehicles. Of course, not everyone doing so is guilty of any wrongdoing, but in the mix are a number of corrupt individuals and others who have such power that questions may be asked about how they have accumulated their wealth and why they may have sought to obscure the fact that they hold it in investments structured to thwart transparency. Even where there are reasonable explanations given (Tony and Cherie Blair for example), tough questions have ensued around the ethics involved and, in some instances, whether the line between tax evasion and tax avoidance has been crossed. The types of financial structuring revealed by the papers is also associated with channelling criminal and fraudulently obtained monies and white-collar lawyers around the world are sharpening their pencils.

As we previously reported in our article Transparent Property, foreign wealth is attracted to UK property investments because of our robust legal system and flexible investment structures. However, the Government has come under increasing pressure for transparency around ultimate beneficial owners. Since June 2016, UK companies have been required to provide details about their ultimate owners and controllers to Companies House and the information is held on a publicly available register - the People with Significant Control (PSC) Register.  This has included many property holding entities. The extension of this regime to overseas entities has been long promised.  Draft legislation was published in 2018 but has yet to be presented to MPs. Meanwhile, the corporate criminal offence of failing to prevent tax evasion at home and abroad (Part 3 of the Criminal Finances Act 2017) is designed to capture corporate entities and their advisors in circumstances like these. It will be interesting to see how the government enforcement agencies respond. 

The news this week has certainly ramped up the political pressure - some critics have suggested that the reason for the legislative delay is the number of heavyweight Tory donors whose names are in the Pandora Papers. UK and Overseas entities who had become complacent about the so-called “beneficial ownership register” becoming law should take note and ensure that their information systems are up to date and robust. 


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