In our secondary school days, those unfortunate enough to lose their belongings would be admonished: “Lost property…careless owner”. The United Kingdom Government is planning to teach many high net worth Nigerians and some members of our middle class a financially painful school lesson.
In recent years, the UK had one of the best performing property markets in the world. It was buoyed by inflows from Russia, China, Dubai and Nigeria. With high global oil prices, this new class of super-rich were feted and courted by the British with few questions asked as they snapped up attractive UK properties. But there were warnings that all was not well. In March 2015, Reuters cited the UK as a haven for illicit funds.
Transparency International’s Executive Director, Robert Barrington, in 2015 said, “There is growing evidence that the UK property market has become a safe haven for corrupt capital stolen from around the world, facilitated by the laws which allow UK property to be owned by secret offshore companies.” Over 36,000 properties in London, mainly in highbrow areas, are said to be owned by offshore companies. Various reports cited London as a money laundering haven, but the UK Government was conspicuously silent on the issue, turning a blind eye as millions of dollars poured in.
Sceptics may suggest that the UK Government is looking for how to fund the bill for its Brexit divorce from the European Union or to finance its budget deficit. Whatever the reason, the new UK law that introduces “Unexplained Wealth Orders” is a carefully devised move that could see a massive transfer of wealth from Nigeria and the countries mentioned above to Britain.
From January 31, 2018, new powers enable the UK Government to query “Unexplained Wealth” and seize assets whose funding source cannot be explained. The UK courts can grant Unexplained Wealth Orders and forfeit property for which the owners are unable to prove the source of fund. The properties will be transferred to the UK Government and sold to fund their law enforcement efforts.
Whilst the narrative in the UK is that the plan is to tackle Russian oligarchs, Nigerians will undoubtedly be affected due to their love for all things British and the threshold is just £50,000 (N25M). According to a British law firm, Mishcon de Reya, the requirements for obtaining the UWOs include that “there are reasonable grounds to suspect that the known sources of the respondents’ lawfully obtained income would have been insufficient for the purposes of enabling them to obtain the property.” There is a special focus on politically exposed persons, but there is an implied presumption of guilt for non-politicians too. Interestingly, the orders can be obtained even if the property was purchased before the law came into effect and it does not matter where the property is located, whether or not the person resides in the UK or whether there may be other persons who hold the property. In summary, it will be relatively easy for the UK Government to secure these orders against foreigners.
Those who have followed that standard advice to have two or even three layers of nominee ownership to shield the identity of the true owner will find themselves as targets. This standard structure, advocated by offshore specialists who set up trusts in Mauritius, British Virgin Islands and other havens, will not offer protection against the UWO’s if the ultimate owner cannot explain the source of funds. The UK has already put in place the Beneficial Ownership register for Overseas Legal Entities. This means that a Nigerian who owns a UK property through a Mauritius-based Trust, for example, could see their names exposed and therefore need to prove the legitimacy of the source of funds.
However, thankfully, for Nigerians there is a way out. This is one of those rare situations, where Nigerians should be extremely grateful to their government.
The ongoing Voluntary Assets and Income Declaration Scheme’s tax amnesty is a potential escape. VAIDS allows Nigerians to regularise their tax status but importantly entails an asset declaration. This basically allows citizens to restate their income and assets over the last seven years and beyond. There is therefore hope of a valid defence against an UWO application. If a Nigerian is confronted with an UWO action, but had declared the asset and paid the right taxes no matter how many years after the purchase, it will be hard for the UK to justify a seizure.
Without the tax amnesty, Nigerians would be at serious risk, scrambling around to procure backdated tax clearance certificates which would be readily disregarded by the UK courts on the grounds that there would be no evidence of tax payment in the year under question. Of course, VAIDS was not designed as an amnesty for looted funds or hot money but it could offer a very valuable protection.
Nigerians have traditionally not paid taxes and have never been asked to fully explain their income. That era is over forever and with the volume of investments in the UK property market, we are particularly vulnerable.
Paul Olanitan, South London, UK
Copyright PUNCH.
All rights reserved. This material, and other digital content on this website, may not be reproduced, published, broadcast, rewritten or redistributed in whole or in part without prior express written permission from PUNCH.
Contact: theeditor@punchng.com
source http://punchng.com/nigerians-and-uks-unexplained-wealth-orders/
No comments:
Post a Comment