The latest evidence of massive tax avoidance going on right under our noses – uninvestigated, undetected, unaddressed – is truly staggering. An FT analysis of Land Registry data has found that that at least £122bn of property in England and Wales, a sum equal to no less than 8% of Britain’s entire GDP, is held through companies in offshore tax havens. This colossal level of wealth avoiding and evading tax is actually great than the total value of all housing stock in Westminster and the City of London. It immediately raises some profound and disturbing questions. Why has it been left to the FT to uncover this monstrous sidestepping of the UK tax laws rather than the government which likes to promulgate the idea that it’s cracking down hard on tax cheats? Why has the government been so slow and so ineffective in blocking this gigantic loophole which it could easily do if it were really minded to do so? Does it not indicate that London has now become tax haven-on-the-Thames, a magnet for the secreting away of dirty money from all over the world, most notably for Russian oligarchs, but also for corrupt tyrants like Abacha, Marcos and the Gadaffis? And if this enormous scandal were seriously tackled, would it not remove the need for any further austerity?
Nearly two-thirds of the 91,000 foreign company-owned properties in England and Wales are held via the British Virgin Islands and Channel Island structures. Yet all that the government has done is to impose a 15% rate of stamp duty on ‘enveloped’ properties (i.e. properties held through a company). This is such a minor element of the scandal as to constitute no more than a distracting device or a smokescreen to give the impression that action is being taken when the heart of the problem is being ignored. What the government should be doing is 3-fold. First, though Cameron announced last year that details of who owned UK-based companies would be made publicly available, this has not been done. Land Registry records show only the nominee owner or entity holding a property, not the real ultimate owner of the company through which the asset is held. This loophole should be closed immediately. Second, since the BVI and Channel Islands are Crown Dependencies, like 8 other UK-controlled tax havens which are also UK Overseas Territories, they should be instructed to reveal to HMRC details of all the accounts they hold belonging to UK citizens. If they decline or refuse to do so, HMG should refuse to recognise financial transactions emanating from them as valid, which would rapidly bring them to heel. Third, it should impose a progressive annual property tax on all these commercial and residential premises at a level which makes offshore holdings unprofitable compared with property registered in the UK.