The Bristol Cable

Local pubs, hotels, flats and cinemas are owned by companies based in tax havens.


Additional Research: Shanna F. Jones
Illustration: Francesca Hooper francescahooper.net

When we think of tax havens, secretive companies and the property market, we usually imagine mansions in the plush parts of London bought by shady elites with dirty money.

Recent leaks of huge troves of confidential documents, from the Panama Papers in 2016 to the Paradise Papers in 2017, have exposed the scale and reach of the offshore world. In the UK the revelations have included big political players and celebrities, as well as national treasures from Gary Lineker to the Queen, stashing cash offshore.

Now data released for the first time by the Land Registry, the government recorder of property ownership, shows the use of companies registered in tax havens for the purpose of purchasing property is very much a national issue too. Almost 650 Bristol properties of all shapes and sizes are owned in a variety of tax havens, from nearby Guernsey to lesser known jurisdictions such as Mauritius or Lichtenstein.

A seemingly random high street shop in Westbury-on-Trym? Owned via the west African tax haven of Liberia. The Marriott Hotel on College Green? Owned by a company registered in the British Virgin Islands headed up by a former chief in the Abu Dhabi Investment Authority. The Showcase Cinema at Avonmeads shopping centre? Owned by a company registered in the tax haven of Delaware, USA. There’s also hundreds of flats and prime office space owned by companies registered offshore, from Hong Kong to Cyprus.

One thing to bear in mind is that while the companies themselves may be based outside of the UK, many of the ultimate owners are UK companies and individuals. So why do people opt to set up companies in these offshore jurisdictions? The first reason is secrecy, a hallmark of tax havens. It’s very difficult to determine through official channels such as company registries who is behind these companies, and who’s really benefiting. The result is that illicit money and corrupt officials from overseas could be stashing cash in Bristol property, and it’s near impossible to find out.

The second is tax avoidance. These jurisdictions offer many simple and exotic schemes that allow companies and individuals to reroute income and profits made in one place to another, where – voila! – no taxes are due.

Through companies in tax havens which in turn own properties in the UK, individuals and companies have been able to avoid all manner of taxes over the years, such as inheritance tax, stamp duty, capital gains tax and corporation tax.

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Years of scandals fed by huge leaks, such as 2016’s Panama Papers and the Paradise Papers last November, have led governments and the EU to begin to close the net on some of the schemes. Many of the advantages have been eroded in recent years, for example by an annual tax on high value residential properties owned by offshore companies, which was introduced in 2012. Still, there is no root and branch reform, and much remains legal – which for many is part of the point. Meanwhile, billions of pounds of potential taxes continue to be lost and the risk of money laundering continues.

Recent research has shown the dark side of offshore property ownership. A 2017 report by Transparency International found that the influxes of offshore money into London property carried high risks of links to corruption and were exacerbating the housing crisis. It seems that this could be the case in Bristol too.

New research on the property market across England and Wales from King’s College London also shows that the influx of investment in residential property from companies registered overseas, many of which are based in tax havens, has a strong link to the dramatic increase in house prices over the past decade and a half. While this is clearly not the only cause of the housing crisis, the King’s study found that in the absence of offshore investment, house prices could be up to 19% lower.

Using information from international leaks and other data sources, we’ve analysed the information and highlighted some key info.

Check out our interactive online map, or get involved with the research.

 

1) Top places to buy your property from, avoid paying your bit, and hide your identity

Companies registered in 31 offshore jurisdictions all over the world own property in Bristol. Here’s the top five. Notably, all except Hong Kong is an overseas territory or crown dependency of the UK. According to the Tax Justice Network’s 2015 Financial Secrecy Index, if all the jurisdictions within the UK’s orbit were taken together it would be the most secretive jurisdiction in the world, knocking Switzerland off the top spot. Properties in Bristol are owned by companies based in places such as the Cayman Islands, Mauritius, Panama and Luxembourg.

Jersey 218
Guernsey 132
British Virgin Islands 95
Isle of Man 31
Hong Kong 26
2) Bristol’s iconic buildings owned where the sun shines

From the Avon Gorge Hotel in Clifton, to Colston Tower and the Bristol Marriott Royal Hotel, some of Bristol’s most recognisable and prominent buildings are owned in tax havens as far flung as Hong Kong or Panama.

3) Is your local boozer owned in the Cayman Islands?

Your local may have gone international. Researching the data shows that at least 20 pubs in Bristol are owned by offshore companies from the Isle of Man to the Cayman Islands. Check out our map to see if your local’s one of them.

4) Help to Buy…by dodging taxes

According to Cable research, the data shows that up to 200 residential properties are owned by companies based in tax havens. Who needs ‘Help to Buy’ or a stamp duty cut when you can buy and sell Bristol properties through tax free jurisdictions?

6) Fuelling the student housing boom

It was reported last year that up to 250 homes a year are being turned into student digs, according to council estimates. Paul Smith, the council lead for housing, says this is placing strain on the housing market for non-students in the city.

However, one element that’s been overlooked until now is the growing offshore investment in the booming economy of student lets. A range of buildings owned by offshore companies have been converted into student digs. From single units to whole city-centre buildings, at least 79 student accommodations are now directly owned offshore or built on land owned offshore.

7) £8 billion…from just one loophole

Between £5 billion to £8 billion per year is estimated to be lost from the public coffers from a loophole that exempts offshore companies or individuals from paying tax on profits from UK property transactions, according to Stella Creasy MP. The government has now pledged to close this loophole.

 

Read more on: housing, offshore, tax...

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