Thursday, 19 July 2018

Response to the consultation on the Register of Persons Holding a Controlled Interest in Land

My croft
Environment, Climate Change and Land Reform Committee

Land Reform (Scotland) Act 2016 (Register of Persons Holding a Controlled Interest in Land) (Scotland) Regulations 2021 - Call for Views

SUBMISSION FROM Simon Brooke


Preamble

Much land in Scotland is held by extremely wealthy individuals who chose to use opaque ownership structures to avoid taxes or other civil duties. There is no reasonable justification for an honest person to use opaque ownership structures or secrecy jurisdictions. Such people have the ability to hire extremely ingeniuous lawyers to work around the intention of legislation, as we saw with Agricultural Holdings (Scotland) Act 2003.

Consequently, legislation aimed at cutting through this veil of secrecy must be simple, clear, and free of weasel-words like ‘reasonably’. Further, because of the degree of wealth (and the penchant for secrecy) of some of these individuals, fines are unlikely to be effective deterrents.

Failure of undisclosed controllers of land to register

Consequently, there’s not a lot of purpose in being able to fine persons with a controlling interest in land where the ownership structure is opaque and held offshore in a jurisdiction in which the writ of the Scottish Government does not run, and the persons choose not to disclose their interest.

Instead, the Government should establish a Public Factor, who should take over the management of lands where the the controlling interest cannot satisfactorily be established, and manage that land in the public interest, retaining any and all profits, until the natural persons with a controlling interest choose to identify themselves and register their interest to the satisfaction of the registrar.

Non-natural persons

Non-natural persons should not be deemed ‘controlling interests’ for the purpose of this legislation. Behind every non-natural person are natural persons who control them. We need to disintermediate this, radically. Non-natural persons, having a controlling interest in land, should be required to register those natural persons which ultimately have controlling interests in themselves; otherwise, the value of the register is negligible.

Redactions and elisions

While I understand the force of the points made in para 71 of the Draft Explanatory Document, the power of the registrar to make redactions or elisions from the public register should be sharply circumscribed, and should in my view be limited to those cases where the personal safety of natural persons can be shown to be at risk.
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