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Financial transparency – The danger in showing one’s cards?
The world’s financial system charges headlong towards transparency. There seems to be a beneficial ownership register being created or proposed for everything at the moment. Company ownership, residential property…toenail clippings.
We reminisce of the good old days where FATCA, CRS and CDOT were figments of a depraved imagination.
We have written more thoughtfully on some of these issues on this blog before.
In the US, it has long since been a tradition for politicians to publish their tax returns. Indeed, Mr Trump was the first major-party nominee in more than 40 years not to release his tax returns.
But we don’t go in for all that gesture politics stuff in the UK do we? Well, err, seemingly so. Cameron, Corbyn and May have all released their rather dull tax returns. The public and professions pontificating whether Corbyn had put his salary in the correct box – or something equally tedious.
John McDonnell would have – had he not lost the election – poured the disinfectant of sunlight on large companies by, you guessed it, publishing their tax returns.
Indeed, this concept of publishing tax returns is perversely popular. In in a YouGov poll in 2012, 51% of people thought that all tax returns should be made publicly available. It would be interesting to see whether this has changed much. However, bearing in mind that 10-11m tax returns are filed each year and there are 65m people in the UK, even after stripping out those below the age of 18, the cynic might assert that it is those not filing returns who would like to see them published!
But without wishing to sound like King Canute sat in his deck chair, or an apologist for tax evaders and money launderers, perhaps it is at least worth considering the potential downsides of such clamour.
I have always maintained that those with wealth should not have to open up their financial affairs for inspection by someone with too much time on their hands. In my view, this does not make them dodgy. Financial privacy seems to be a perfectly legitimate objective.
Of course, Governments having this information makes it easier for them to go after the criminals. However, all policy decisions should not be purely about making life easier for the Government and its agencies. Sadly, making HMRC’s life easier on its stretched resources, and at the expense of the taxpayer’s rights, is a common theme running through recent anti-avoidance legislation.
However, I read today in the FT that Company Directors are twice as likely to be the victim of identity theft. This was based on a study between 2012-15. Since then, Companies House has opened up most of its records free of charge. Any member of the public can scan the accounts and ownership of any UK company. For just over 12 months, it has also been a legal requirement to publish the beneficial owners of the Company – curtailing the use of nominee directors. One would expect this problem to become worse.
Indeed, Norway mentioned above have now made it necessary for one to register before viewing someone’s return. If you decide to check out how your neighbour bought his Porsche, he will be sent an email telling him that YOU have looked him up.
Unsurprisingly, the number of people searching the database has reduced significantly.
Perhaps they have something to hide?
If you have any queries on financial transparency, or any other matters, then please get in touch.