London has long been regarded as one of the world’s leading financial centres.
Regardless of whichever of the political parties is in charge of government, the capital’s status has been a great source of pride – and, let’s not forget, no little income for the Treasury either.
It’s one reason why so many companies flock to do business in the UK: they want to demonstrate that they’re active in a major global market.
According to figures released by Companies House in June last year, just over four million businesses are registered in the UK – 3.5 per cent more companies than the year before.
Given discussions about whether the economic uncertainty of Brexit might result in large numbers of enterprises choosing to do their business elsewhere, that might seem a cause for celebration of sorts.
However, Government has announced a “major upgrade” of the register of companies because of a desire to reduce the potential for criminal abuse of the system.
The aim, says Business Minister Kelly Tolhurst, is to protect businesses from fraud and give “entrepreneurs and businesses the confidence they need to do business in the UK”.
Engendering confidence will, of course, be an integral part of the process of attracting commerce to the country as, when and if the UK completes its withdrawal from the European Union.
Under the terms of what’s being regarded as the “biggest overhaul of its official corporate register in 170 years”, companies will be required to disclose more detailed information before being admitted onto the list.
Even so, the prospect of a greater sharing of information between Companies House, HMRC and law enforcement agencies is equally intriguing.
The purported ability of the Revenue to access even more material with its Connect platform – dubbed the ‘Snooper Computer’ – may cause even law-abiding businessmen and women some discomfort.
After all, as I have written elsewhere on this ‘blog, the Information Commissioner’s Office has only recently taken HMRC to task for improperly storing millions of voice data files.
The question is whether HMRC has the appropriate mechanisms in place to stop this information falling in to the wrong hands.
That’s certainly not to say that I disagree with the idea of delivering a more robust means of managing companies than is in place at the moment.
Indeed, many would say that the Government has been slow to shine the torch at the UK register. Instead, it has been very much concerned with the perceived failings of company regulation in offshore tax havens, including those Crown Dependencies such as Jersey, Guernsey and the Isle of Man, after coverage of the so-called ‘Paradise Papers‘.
Britain was certainly quicker off the mark than many other states in demanding that firms make public who actually owns and influences them, taking the Register of Beneficial Ownership ‘live’ in April 2016.
However, the UK is only pushing for such a process to be the global norm by the end of 2023, almost four years after it becomes the case across the rest of the European Union.
Furthermore, a report on arrangements put in place by the UK to tackle both money laundering and the financing of terrorism was highly critical, concluding that a failure to verify company ownership information made it less than reliable.
Some of these are very basic checks that would be completed as a matter of course in most other offshore jurisdictions
Further, an earlier study, published in 2016 by the anti-corruption group Global Witness, suggested that some 3,000 businesses listed at Companies House were based in tax havens, while 2,000 of those men and women regarded as ‘People of Significant Control’ at a variety of firms were, in fact, disqualified directors.
All that would not only suggest that the kind of change outlined by the Government is very much overdue but that it would serve ministers well to put their own (Companies) House in order instead of being all too ready too often to point the finger of criticism in the direction of other jurisdictions.
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