A recent report from The Ferret indicates that tax haven companies own billions of pounds’ worth of Scottish property. The report specifically found that foreign companies own Scottish property valued at £4.4 billion, with more than half of that in tax havens. This report has renewed calls for increased transparency to prevent lost tax revenue in Scotland.
The Ferret’s report comes from Scottish data registers. On December 31, 2019, of the total Scottish properties, 3,237 were leased or owned by companies outside the United Kingdom. The total amount that these companies paid for the properties was £4.42 billion, although they are likely valued higher today.
Areas in Scotland With the Most Foreign Ownership
Of those 3,237 properties bought for £4.42 billion, tax-haven-based companies bought 1,851 properties for £2.76 billion, or 60 percent. The tax havens with the most considerable percentage of Scottish property ownership include the Isle of Man, Jersey, Guernsey, Luxembourg, and the British Virgin Islands.
The councils in Scotland with lots of foreign-owned properties (not all of which are tax-haven-owned) are Glasgow City with 592 properties, and the City of Edinburgh with 516. Aberdeen City has 227, Renfrewshire with 182, and South Lanarkshire with 181. The properties in question tend to be in large cities and near Glasgow airport. The airport is unique in that its parking lot includes spaces leased by foreign companies. Fifty-three of the properties in Renfrewshire are in this parking lot, which was a controversial scheme.
Off-shore Jurisdictions With the Most Scottish Property Ownership
Based on the number of properties, the Isle of Man has the most Scottish properties leased or owned, with 597. Jersey follows this at 561, the British Virgin Islands at 440, and Guernsey at 326.
In terms of the total value, Jersey has the most, with a total value of £1,021,203,843. Luxembourg trails Jersey with a total property value of £975,462,020 and Guernsey with £594,338,689.
According to the National Crime Agency, many legitimate investors look to buy property in the United Kingdom, especially Scotland, because it is stable. Simultaneously, there is a real risk that criminals can use these properties to launder money.
Global Witness reaffirms this concern, pointing to past investigations showing that criminals hide dirty money in property and use anonymous companies to protect their identities. The campaigning organization called the report “deeply concerning” and called for greater transparency.
Those who argue against tax havens, such as Transparency International UK head of advocacy, Rachel Davies Teka, point out that just because a foreign company owns a property, this does not indicate any wrongdoing. However, it becomes problematic when there is no way to determine its ownership, such as in tax havens known for secrecy. After all, many criminals would hide their dirty money in overseas shell companies that are anonymous.
Since 2016, the government has promised to create a register of UK property ownership, but it has yet to materialize. Prime Minister David Cameron pledged in 2016 that it would be ready by 2018. The current government claimed it would be ready by 2021, in February claiming it will happen when there is time in parliament.
Scotland’s government is also working on plans for a Scottish property register. Scotland will reconsider if it is still necessary if the UK register occurs first. According to Ian Murray, Edinburgh South Labour MP and member of the UK’s Foreign Affairs Committee, one of the biggest concerns is the loss in tax revenues for Scotland. Also, others in the committee cite money laundering as another significant concern.
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