
Offshore owners of British property to be forced to reveal names - nextstep486
https://www.theguardian.com/business/2018/jul/23/offshore-owners-of-british-property-to-be-forced-to-reveal-names
======
jeffwass
It’s about time, this has been a serious issue in the UK.

I think it was the BBC that did a program a few years ago with an undercover
reporter pretending to be a corrupt Russian government official buying London
real estate to launder their stolen gains.

The undercover reporter would go to see various flats with intent to purchase,
and “admit” to the sales agents flat-out that he worked for a Russian health
care office, processing billions of pounds worth of funding, and siphoned a
little off for himself.

He’d then say he needed to know how to close on a property in such a way to
hide his true identity. Without fail every single realtor gave him advice how
to set up a shell company or which law firms he could contact that would do it
for him by not asking all the required questions.

Even after the BBC called those estate agents and law firms to say they were
duped, that the buyer was an undercover reporter, and if they had any comment,
most refused to even acknowledge any wrongdoing. Despite the undercover buyer
clearly indicating the funds were stolen.

~~~
flatfilefan
It sounds like there is more to this story than just some companies (or
corrupt officials behind them) buying and selling the property in London.
Could it be that US has found out many Russians seem to own property in UK but
there is no way to coerce them in any other legal way?

~~~
toyg
_> US has found out many Russians seem to own property in UK_

Nah, it has been widespread knowledge for decades now. When Roman Abramovich
bought Chelsea FC in 2003, the phenomenon was already well-known. London has
been Oligarch Central pretty much since the Eltsin days.

No, the real issue is that the UK government continues to struggle under
public debt. Since 2010 they've cut every expense they can cut, so now they're
trying to raise taxes. One of the avenues for new revenue (eh) is to close all
the well-documented tax-code loopholes; and the most classic one is where you
create Company X from a tax haven, make it buy property in London, then sell
the whole company, bypassing all taxes that should be triggered by property
sales. That's what this new law is really supposed to fight.

It's actually not a terrible idea, and I say that as someone who actively
despises the current government. Obviously it will likely end up favouring the
sort of old-money connections that the Tory party naturally represents, people
who cannot hide their wealth because they've literally owned most of the
country for centuries; but if it brings home some much-needed cash and stems a
bit the relentless flow of dirty money that keeps London fat and arrogant, so
be it.

~~~
ghshephard
I wonder if you could combine that approach (having property owned by a
company in a tax haven) with Prop-13 (in which property taxes grow very slowly
if the property is not sold), and if anyone has ever done an assessment of how
much property in California is owned by such entities.

~~~
jiveturkey
yes, that’s why a CA law was recently passed that when ownership of the real
estate owning company changes hands, that is a) a change in ownership of the
property and b) such changes must be reported to CA.

unenforceable, eg there’s no way for CA to find out when foreign (non-CA
owned) companies change hands, but at least the law is on the books.

~~~
ghshephard
And, of course the trivial work around that is to have the ownership of the
real-estate owning entity be yet another offshore series of organizations.
That way the principal owners of the entity which has title property never
change, but the beneficial shareholders of _those_ entities can be
transferred. Etc, etc...

I.E. For a property on 4th avenue, the entity which owns it is Starfish Inc.
The shareholders of Starfish Inc, are Corp1, Corp2, and Corp3.

The property on 4th avenue is never sold, it is always owned by one owner -
Starfish Inc.

Likewise, Starfish Inc is never sold, it is always owned by Corp1, Corp2, and
Corp3.

Add as many levels of indirection and obfuscation in as many tax-free havens
as it's worth to avoid having to pay additional property taxes.

Only the shares in Corp1, Corp2, and Corp3 are transferred/sold to new
parties.

------
ionised
It is worth remembering that the UK was the only EU nation to try
diluting/blocking wide-reaching legislation to combat tax havens:

[https://www.theguardian.com/world/2015/jun/18/uk-reject-
eu-p...](https://www.theguardian.com/world/2015/jun/18/uk-reject-eu-plans-
combat-multinational-tax-avoidance)

[https://www.theguardian.com/business/2017/nov/26/british-
gov...](https://www.theguardian.com/business/2017/nov/26/british-government-
accused-of-being-soft-on-tax-avoidance)

[https://www.independent.co.uk/news/uk/politics/paradise-
pape...](https://www.independent.co.uk/news/uk/politics/paradise-papers-tax-
avoidance-eu-tax-haven-blacklist-uk-blocking-a8043881.html)

[https://medium.com/the-jist/uk-vs-eu-tax-evasion-
investigati...](https://medium.com/the-jist/uk-vs-eu-tax-evasion-
investigation-f15643a647a3)

Whatever the UK does to look like it is addressing the issue of tax avoidance,
it's exactly that; pure theatrics.

The UK, my own country (or at least its wealthiest citizens) is a huge
beneficiary of offshore schemes and complication tax arrangements.

------
flatfilefan
"to end the UK’s reputation as a high-risk jurisdiction for money laundering"
hm, shouldn't it be "low-risk"?

~~~
ska
depends which side of the table you sit on....

------
Nasrudith
I can't help but think the law is silly in proscribing jail sentences to
/unknown overseas people/ for being unknown. For misrepresentation sure - that
is pretty much another form of fraud but otherwise a seizure by default on the
grounds of no valid registered root owner makes more sense personally.

~~~
IshKebab
You mean prescribing?

~~~
Nasrudith
Err whoops - proscribing would be forbidding good catch.

------
lifeisstillgood
This feels like a Brexit dividend - no seriously hear me out - the normal
conduct of government business is so snarled up with Brexit that almost
nothing can get through - so despite lobbyists, it seems good ideas with clear
benefits get through simply because government has to do something - and the
simplest clearest actually obvious ideas are the only ones everyone can
understand in the time acaikable

~~~
flatfilefan
This isn't the government though, it's the legislation, isn't it?

~~~
lemoncucumber
Americans commonly use the phrase "the government" to refer to any or all of
the branches of government, not just the executive branch. Guessing the
comment you're replying to was written by an American.

~~~
wavefunction
Americans also use "legislature" to refer specifically to the legislative
branch of our and other governments responsible for drafting legislation,
which certainly does not draft nor pass itself into law.

------
iaw
> "A ban on a foreign entity selling or leasing a property without declaring
> its beneficial owner, with jail of up to five years and an unlimited fine
> for those failing to comply"

Is there going to be a mechanism to prevent straw man beneficiaries?

~~~
namibj
Well, that the straw man could liquidate the asset, I assume.

~~~
rahimnathwani
Yeah, and face 'liquidation' himself.

~~~
namibj
I think your argument is orthogonal to this issue and therefore moot. If you
can explain why that is not the case, please do so, I would like to understand
it.

~~~
rahimnathwani
The straw man can in theory liquidate the asset but, in practice, is prevented
from doing so by the risk of harm to himself or his family.

~~~
namibj
Yes, sure, always. But the payoff is huge...

~~~
krageon
What, maybe a million or two for the cost of not being able to live inside the
social circle where you've always existed? You're basically on the run for the
rest of your life and have to practice the strictest security online for fear
of being found by accident by someone who might want to kill you.

Held against the risks and potential future you might gain in the best case, I
think you can say the payoff is tiny.

------
noddy1w
Anyone think it is reasonable to predict plummeting high end real estate
prices and a further pummelled pound as demand dries up and motivated sellers
dump properties and sell pounds here?

~~~
TheCoelacanth
The only people who benefit from inflated property values are rent-seekers. I
see decreasing property values as just another benefit of this policy.

~~~
tonyedgecombe
It's unfortunate for those caught with negative equity.

~~~
spoonie
Those are the people who are taking risk by investing in real estate. They
don’t need bailouts.

~~~
tonyedgecombe
Some of them are just buying a home, I was caught in this when I bought my
first flat, prices fell by 25% and I found it very difficult to move when my
job moved.

~~~
spoonie
That’s risk vs reward though. You take the risk that prices will drop (and
that you will have less flexibility to move) in exchange for the reward that
prices will rise (and for a slightly more stable cost than renting,
sometimes). You can’t have it both ways.

~~~
tonyedgecombe
There is no reward for rising prices as I need somewhere to live, I likely
won’t realise those gains.

