Keeping property investment sound and transparent

by Gary Whittaker

When any individual finds themselves in a position to invest a significant sum of money, there are of course numerous ways of doing it. 

Some might place the cash in a bank account and let it earn interest, but others will seek to make their money work a bit harder and invest in something that might carry less certainty, but offers the potential for better returns.

Undoubtedly, tax is a consideration for anyone looking to maximise their wealth. While most people will fully appreciate that everyone paying their fair share is necessary to ensure Britain has decent schools, hospitals and roads, nobody wants to shell out more than is necessary. 

That can, of course, lead to some grey areas when it comes to investing money, with many people putting cash into schemes, vehicles and companies that are designed to exploit loopholes in the law - often, however, only until the taxman catches up and declares it all invalid. That can mean a sudden large bill from HM Revenue and Customs. 

Indeed, that may be a very good reason to opt for investment in UK property, carrying out purchases and paying the appropriate taxes in a way that is entirely above board and unquestionably legitimate. 

The issue of tax and investments became a big concern early last year with the release of the Panama Papers, in which a number of high-profile figures were named and, in some cases, shamed. Now, it has come to the fore again with a further leak, this time from a Bermuda-based law firm called Appleby. Several terabytes of data - known as the Paradise Papers - were sent to a German newspaper and subsequently passed on.

Among the revelations were that famous figures ranging from Lewis Hamilton to the Queen - or, strictly speaking, those managing her Duchy of Lancaster estate - were involved in tax-evading offshore investments. Some of the Duchy's money was invested in the off-licence chain Threshers and retailer Brighthouse, both of which have been accused of exploiting poor people. 

Conservative Party donor Lord Ashcroft was also named, as were three of the stars of comedy Mrs Brown's Boys and another Dubliner, Bono. 

The nature of the issues varies. Hamilton, for instance, is accused of a para-legal ruse to get a VAT refund on a private jet he claimed was only for business use, while Bono is said to be "distressed" that a Lithuanian firm he invested in via a company based in Guernsey is under investigation by the country's authorities under suspicion of dodging profit tax.

Of course, these revelations concern just some of the well-known individuals whose financial affairs might be regarded as being in the public interest. But beyond those famous faces lie any number of investors who might not be household names, but who may be feeling very uncomfortable now. A great many will not have set out to do anything untoward and will have trusted their accountants.

For these reasons, investing in rental property in the UK may be a simple, straightforward and reliable way to make good money while not being entangled in a twisted web of overseas investments with potential tax issues.  

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07-November-17Legal News