Making the case for privacy…
Last week in my blog ‘Is privacy dead?’… I made the case that the protection of privacy is for the poor, but not the rich. This was echoed by Sigrid Rausing on Kirsty Young’s desert island discs, who said that promoting the case for privacy for the rich – whether to voice concerns about a beneficial ownership register, or any other form of transparency means you have something to hide.
In these days of social media where everyone sees everything, it becomes increasingly difficult to make the case of privacy. Talking to a young litigation lawyer last week, I struggled to answer his question as to why privacy was so important – ‘if you have nothing to hide and have paid all your taxes – what’s the problem?’ – I suppose the answer is in the old proverb – ‘what the eye doesn’t see the heart doesn’t grieve over’.
Privacy is a human thing; a shield to greed, envy, jealousy, power, and hatred…
In the 12/13 March edition of the Financial Times – a paper I used to write for on tax and trusts for 12 years, I read a piece by George Hammond on Sutton Place, in ‘leafy Surrey’.
On March 3rd the government announced sanctions on Russian oligarchs including Uzbekistan – born Alisher Usmanov saying he had ‘significant interests in the UK and close links to the Kremlin’
He was described as having ‘interests in English football clubs Arsenal and Everton’ which if ‘significant’ can be checked in the public register of beneficial owners and owning the ‘sixteenth century Sutton Place estate in Surrey’ for which there is no beneficial ownership register.
The Financial Times asked a spokesperson for Usmanov for clarification since the ownership of the property was far from easy to identify he did not reply. Hammond investigated the Land Register which showed that the registered owners of Sutton Place were two Cyprus-incorporated companies.
Bill Browder said in the Financial Times article ‘Long before there was ever any risk of sanctions, oligarchs have spent [in the UK] because they were worried about their own government, or competitors or enemies coming after their money’ and could invest in UK property in private.
We look at the Russian way of doing things with disdain, what Putin wants, Putin gets. He can ask any of his oligarchs for anything and will get it. He is known as a master of fake news, and funding terrorist activities – but his antics are no different from any greedy gold digger after the fortunes of a spouse – a father, a competitor, an enemy or a journalist seeking to arouse envy.
Wealthy clients are known as ‘private clients’ because they want protection from the human traits of greed, envy, jealousy and hatred and to avoid being shamed into becoming a philanthropist by the press.
It is often said that wealthy individuals want privacy to hide their assets from taxation – but from my experience this is often not the case. An estate such as Sutton Place will be subject to ATED, the Annual Tax on Enveloped Dwellings which is not cheap.
In the good old days, when I was writing for the weekend Financial Times, I would regularly write about tax planning for non-UK domiciled people living in the UK (usually guaranteed to be featured on the top of page 3 with a cartoon) and I would encourage my readers to buy their homes through an offshore company to avoid inheritance tax (at 40%) and stamp duty on sale.
HMRC did not like these tax planning practices but they were legitimate and effective.
In 2013 HMRC introduced ATED which is an annual tax on homes owned by a company worth more than £500,000
The annual levy uses a banding system for the year to 31st March 2023 the lowest band is on homes worth more than £500,000 to £1million at £3,800 and the highest band is on homes worth more than £20,000,000 when the annual levy is £244,750 – which is not insignificant – but for owners it is a price worth paying if the owner fears threats from government, competitors, enemies, and gold diggers – and now possibly even threats of confiscation from democratic countries.
Already we have seen countries across the EU seizing Russian owned assets. French officials in the last few weeks seized a yacht thought to be owned by Igor Sechin, the boss of Russia’s largest oil company Rosneft. In Italy police boarded another superyacht belonging to Gennady Timchenko an oligarch close to Vladimir Putin. It all smacks of Nazi behaviour towards Jewish assets.
However, it is not an easy topic to discuss without retribution – even by private client professionals because we will be criticised for assisting our clients in ‘hiding’ their ill-gotten gains.
Whatever you think or feel – I think the topic is worth debating which is why we will be holding a discussion for the first half of our Caroline’s Club meeting on the 5th April – at the new time of 2.00 pm (so that our friends in the West as well as the East can join). This will be led by Filippo Noseda partner with Mishcon de Reya. The second half of the meeting will be spent ‘networking’ in break out pods where each professional can share a three-minute case study with others in their pod.
We also encourage our members to invest in recording a podcast so that if anyone wants to introduce a professional to one or more of their clients they can forward the link to listen to more background information and can find their contact details on our digital directory.
Please let me have your comments and don’t forget to register for Caroline’s Club – it’s FREE to register and you can then learn more about our exclusive award winning club of leading private client professionals who are keen to win business and build trust with clients simply register here