Ghost House tax loophole hinders efforts to stop Russian sanctions from flowing into Britain

Efforts to stop are sanctioned Russian Money coming into the UK is constrained by a tax loophole that allows wealthy people to withhold information about their assets or income from the authorities, The Independent can reveal.

Providing – called “haunted house” – allows someone to claim both non-domestic status and the fact that they have no income in the UK. It also means they don’t have to file a tax return, even if they live permanently in Britain.

Investigators from Britain’s newly formed corruption group, the National Anti-Crime Agency’s kleptocracy, are increasingly frustrated that they are struggling to target high-profile black Kremlin-linked Russians during the war in the village Ukraine.

This was announced by one official dealing with the UK sanctions policy The Independent that the UK tax system, and in particular “ghost houses” and non-houses “severely limited” their ability to track and track the income streams of individuals.

Another said it was impossible to know the full extent of the use of ghost house status, but its ability to cover up criminal or other undesirable activities is of “serious concern.”

Labor said the loophole should be closed as a “national security issue”.

About 70,000 people claim non-home status each year, according to official figures, but there is no data on how many ghosts exist in Britain. Unlike non-homes, ghostly homes do not pay income tax at all because they claim to have no taxable income in the UK.

Sources added that the lack of data on both non-homes and ghosts is a “known problem” in the Ministry of Finance and that some officials have noted the potential benefits of reforming these statuses in recent months.

These “ghosts” in the UK tax system are often some of the richest people in the world, wives, mistresses or children of criminals or senior foreign politicians, as well as perfectly legitimate individuals such as wealthy retirees.

In recent weeks, controls on the UK tax regime have tightened The Independent it turned out that Akshata Murti, the wife of Risha Sunak, has no residence status. Ms Merty, an Indian citizen whose family business is estimated to be worth around £ 3.5 billion, continued to enjoy homeless status after her husband became chancellor in 2020.

A few days later, it became clear that Sajid Javid, now the Minister of Health, for six years, working as a banker, he held controversial non-home status. Mr. Javid too used an offshore trust, working as a key aide to George Osborne in 2011, which reduced his personal tax burden.

Rachel Reevesthe shadow Labor chancellor said the opening of the ghost house had caused serious problems.

“This is extremely worrying – and not just because some of the top benefits, while working people and businesses in Britain are suffering from the biggest tax burden in 70 years,” she said. The Independent.

“This is a matter of national security and it needs to be addressed urgently to ensure that it does not hinder our efforts to brutally crash on the dirty money associated with Russiabecause Putin’s terrible invasion of Ukraine continues. “

Work promised to abolish non-home tax statuswhich he called “obsolete.”

A cell of kleptocracy, linked to the UK’s National Center for Economic Crimes and former Department of International Development experts on money laundering, was set up earlier this year.

Ghost houses belong to section 809E Finance Act 2008 justify the absence of tax requirements and the use of status is not in itself a sign of wrongdoing.

But while some wealthy people who are “completely normal” enjoy the position, others form a hidden “uber elite” in the system, according to one welfare adviser who directed clients to use the position.

Often these are individuals for whom the risk of later litigation if their financial affairs become the subject of an investigation in the UK is less troublesome than passing on information about the origin of their income to HMRC, the adviser said.

They were asked to remain anonymous because of the fragility of their clients ’affairs. “It’s just one point less if there is no tax return,” they added.

They said that they advised rich people to enjoy this status, including people with Russian, Belarusian, Kazakh and Iranian citizenship.

Among those who can use such mechanisms and where they may intersect with the sanctions policy may be people like Polina Kovaleva, the alleged stepdaughter of Russian Foreign Minister Sergei Lavrov, the same adviser said. Britain has been criticized for postponing sanctions against Ms. Kovaleva earlier this year.

Dan Needle, founder of Tax Policy Associates, a nonprofit tax policy advisory company, said there is a wider problem of transparency in the affairs of those who do not enjoy non-home status.

“Non-homes are a black hole. HMRC has no information on their income on their global income or assets. “

Individuals can simply become non-home using a separate “net” offshore account to fund their expenses in the UK, and if they transfer money from that offshore account to their UK bank, it will have no tax implications in the UK.

Experts, including Mr. Needle, noted that this is a widespread and perfectly legal method of tax planning.

The government has been criticized for delays in introducing a register of offshore British property owners, which experts say also contains many loopholes.

The wealth of haunted houses is often channeled through countries such as Switzerland or offshore tax havens that allow banking secrecy to hide the sources of their wealth.

With little or no knowledge of their income, it is difficult to use recently developed UK anti-money laundering tools such as Unexplained Wealth Orders to target their financial affairs, one source said.

“We are guided by the data we have about individuals, combined with intelligence collected at home and abroad. Too often we don’t see the consequences of data we don’t possess. Again, these are often black holes, ghosts in our tax system, ”one official said.

The National Anti-Crime Agency declined to comment.

The Treasury does not deny that officials have expressed concern about tax provisions such as non-home and ghostly status in the fight for sanctions against individuals linked to Russia or other enemies of the British state.

A spokesman for the UK government said: “Non-homes play an important role in financing our public services through their tax contributions – worth more than £ 6 billion a year.

“Combating those who deprive public services of vital funding remains an important part of HMRC’s work, and they have appropriate powers, including fines and penalties, for those found dishonest in their tax returns.

They added: “Where sanctions are evaded, the National Anti-Crime Agency will investigate, and the government recently announced a new special ‘anti-kleptocracy cell’ to target sanctions and assets of corrupt elites hiding in the UK. ».

Ghost House tax loophole hinders efforts to stop Russian sanctions from flowing into Britain

Source link Ghost House tax loophole hinders efforts to stop Russian sanctions from flowing into Britain

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