EU to force Britons to publish details of wills and property
February 9, 2014
Mark had the following article published in the Sunday Telegraph today. You can read it online here
The spirit of our age favours transparency. Whether light is being shone on the previously dark corners of intelligence, executive pay, MPs’ expenses or overall tax take from global corporations, an insatiable quest for information is rooting out bad practice. But when does this drive for openness morph into an invasion of privacy?
In a bid to beef up EU anti-money-laundering laws, pressure is fast growing on the Treasury to introduce a publicly accessible register of family trusts. And why not? After all, many people assume that trusts in the UK are used almost exclusively by wealthy families, often as a means of avoiding tax. But this is a misconception which, unless challenged, risks exposing to public view the private financial affairs of countless ordinary British families.
Far from being the preserve of the elite, trusts are in fact part of everyday life in the UK – so much so that we often do not even notice them. Though they may not realise it, any couple that owns a home, has a will and life assurance will probably have several trusts.
The result is that while the concept of trusts is almost unknown across much of the EU – reflecting a different civilian legal tradition – there are millions in existence here. Most are very low risk from a money-laundering point of view. Furthermore, UK trusts are rarely used for tax avoidance – indeed they are often taxed at high rates.
The bureaucracy and sheer cost of establishing from scratch a comprehensive trust register, which will have to record millions of such family trusts, should give any government committed to cutting red tape pause for thought. Disproportionate cost, however, is not the only worry. Crucially, a family’s right to keep their affairs confidential is also under threat. Among trust funds that have taxable income, HMRC research indicates that about one in four has been established because one or another of the beneficiaries is considered vulnerable in some way. If parents or grandparents wish to set aside some money to help a vulnerable child, should this arrangement be paraded on a compulsory public register?
David Cameron has already personally intervened in the debate in Brussels, arguing that while he is an advocate of greater transparency for companies, trusts are different. He is right. The principle of transparency is a good thing, but in the case of family trusts there are very strong arguments for maintaining the status quo. The EU Parliament nevertheless continues to press ahead with registry plans.
Substantial damage could be done if we allow the rest of the EU to push the UK into establishing a public trust register. Continental bureaucrats championing this legislation have little or no experience of trusts and we risk an unhelpful precedent being set unless we robustly defend the uniqueness of our system.
A register would be costly, cumbersome and, most seriously of all, intrusive. The invisible line between openness and privacy is about to be crossed.