The 11 million documents leaked into the public domain relating to a Panamanian finance company and an array of prominent figures around the world are certainly catching the attention of investment markets. As researchers continue to probe through the millions of documents we may well find out the mystery owners of various high-profile properties in London. This is something the UK government has been targeting for some time although there is a suggestion that perhaps there was more talk than action?
Will a transparent market help?
At the end of the day investment markets are not necessarily interested in which individual or which company owns a prominent property in London. The London property market has been one of the best performing in the world even though it is deemed to be one of the most expensive. The improvement in future transparency will help the tax authorities to keep track of individual and company assets in light of lodged tax returns.
Money-laundering issues
One problem which could cause some concern across investment markets is the issue of money-laundering with early indications that some funding may well have come from more dubious sources. The fact no criminal charges have yet been served highlights both the complicated nature of overseas investment regulations, tax obligations as well as proving beyond reasonable doubt that any regulations have been broken.
Money-laundering and market transparency have been in focus over the last few years as the UK government looks to tidy up the UK tax system and investment markets. Constant cries that the Conservative party are working for the “rich” have in many ways backed David Cameron into a corner where the only way out is to clamp down on tax evasion/avoidance.
Future regulations
While we will likely see an array of new regulations relating to tax and ownership issues for overseas investment vehicles there are already fairly strict regulations covering these matters. The UK government may well be forced into tightening some regulations but in reality the basis is already there and has started to impact upon those who have perhaps been “lax” on their tax returns. Closer co-operation between different countries around the world, the ability to electronically track funds around the globe and a difficulty in balancing many government books will encourage the authorities to close any popular tax loopholes.
Property taxes
If the leaked Panamanian documents lead to an array of back tax payment agreements between HRMC and companies/individuals this may take the pressure off the UK property market. Let’s not forget that the current UK government, despite seen as pro-business and pro-investment, has introduced an array of property related taxes which have hit many investors hard. While many of these taxes have made the headlines and shown the authorities in a more favourable light how much do they actually earn the UK government?
The fallout from the Panamanian information leak is likely to carry on for some time to come and it will be interesting to see how many property transactions are flagged.