The Draft Registration of Overseas Entities Bill: another necessary layer of bureaucracy or a needless obstacle to business in these challenging times?

I’m all for certain necessary regulation, whereby orderly business is carried out with a high degree of integrity and due diligence, but often there is a disconnect between over zealous bureaucrats and the need for commerce.

It is quite true, that at one point buying assets in the UK was ‘loose and light’ and un-doubtedly, there was not enough regulation to prevent ‘dirty money’ being exchanged for, say, property in this country.

Even though the examples were few, they were never the less, undesirable and hence the need for effective money laundering requirements.

No need for more red tape

In the meantime, out there in the real world, with UK Stamp Duty at dizzy levels, very undesirable changes to UK Non Dom Residency in this country at its draconian best, with the uncertainty of the Brexit shadow, the last thing we should be doing at the moment, is introducing more red tape.

Whilst regulation is the ‘antiseptic search light’ in the nocturnal world of business, it can at the same time serve to suffocate business transactions to such a point, that ‘the cure is worse than the ailment’.

The study of regulation in Europe illustrates my point here. After WWII, both Germany and England were highly regulated, but it was the visionary, Ludwig Wilhelm Erhard, Minister of Economic Affairs, who was famed for leading Germany’s post War economic reforms and recovery, by deregulating the markets and as such, the country was free of rations after six months and enjoyed explosive growth. Meanwhile, Britain’s commerce suffocated under the weight of the regulatory burdens such, that rations continued for six years beyond the War and the country’s growth floundered for many years.

One only has to look at the insufferable security arrangements at airports and the frustrations that this causes whilst traveling and compare it to the small number of terrorist actions on planes, to give you an idea of my point here.

New obstacle: Overseas Entity Bill

International residential property buyers are facing a 15% transaction charge by way of SDLT or, they could purchase a property in a corporation and pay an ATED, the equivalent to a Mansion Tax, but if this is not enough to ‘put them off’ they are being ‘trussed up’ with the Non Dom Residency arrangements and now, they meet this new obstacle of the Overseas Entity Bill.

Given that we need positive inflows of capital into this country, now more so than ever before in the post Brexit era, how many hurdles are we going to construct before the international investor gets tired of all this regulation and moves on to other parts of Europe who would welcome them with ‘open arms’?

The truth is, that a canny investor, who craves anonymity for their own good reasons, will undoubtedly find a way around the system, but for 99% of others, they will suffer this regulation only if they are then sufficiently determined to buy property in this country.

Taking rules and regulation seriously

I am well aware that financial regulation is becoming more draconian in other parts of the world, but somehow, we in the UK, take our rules and regulations so much more seriously than elsewhere.

For instance, although there is a Bribery Act, the French arms manufacturers find their way around this and, in doing so, enjoy the benefits, whilst their English counterparts certainly do not and suffer as a result.

The corruption at FIFA carried on for 25 years until Britain and the USA, quite rightly, ‘called time on it’. France paid the bribe to Mr. Blatter and enjoyed the World Cup in Paris, but until we stage this celebrated event in the UK, who has won the battle and who has won the war?

Whilst on the subject of regulation and corruption, I wonder when it is time to do some much needed ‘root and branch’ reform of the murky practices and transactions that take place every hour of the day in Brussels, whilst they, at the same time, incessantly blurt out shameless, sanctimonious, rhetoric.

It is all very well trying to aspire to be ‘Mary Whitehouse’ but not when everyone else is ‘Debbie Does’!