Jordans Warns Over HMRC Supervision Of UK Money Laundering Rules

by Jason Gorringe, Tax-News.com, London

10 June 2008

HMRC supervision of Money Laundering Regulations 2007 is “potentially damaging” to the UK, according to Jordans International.

The firm, which incorporates and administers UK and offshore companies and trusts for overseas entrepreneurs and investors requiring taxation, accountancy and administration advice, warned that the fast-growing trust and corporate services industry could be damaged by a new supervisory regime introduced under the new and far-reaching Money Laundering Regulations 2007.

Martin Palmer, Director of Jordans International, argued on Monday that it is “counter-intuitive” and “potentially damaging” that UK corporate and tax structures set up in the UK for international clients, are subject to supervision by Her Majesty’s Revenue and Customs (HMRC).

He further cautioned that the situation could persuade professional advisers based overseas to turn away from the UK and “look elsewhere” for alternative offshore domiciles for their clients.

“The majority of UK trusts and company service providers will, as a result of the Regulations, be supervised for compliance by HMRC,” explained Palmer, continuing:

“It is a cause for real concern that these structures, established for confidential and lawful tax mitigation, that a tax collection authority has been given the task of supervising and inspecting such sensitive files."

“HMRC will clearly be perceived to have an obvious conflict of interest, and the fact that the regulations enable HMRC Commissioners to enter, inspect and remove files without independent authorisation must be a matter for concern."

“The employment of HMRC as the supervisor for this industry sector is potentially damaging to trust or corporate service providers who are not regulated, as Jordans International is, by one of the professional bodies set out in Schedule 3 of the Regulations."

He concluded: “However good the services of the UK trust or company services industry, if there is a widespread perception that it is substantially supervised by HMRC, this will not be in the country’s interests."

“Hard-headed professional advisors in the world’s leading financial centres may look elsewhere for corporate structures to jurisdictions where business and personal confidentiality is properly protected.”

Recommended