NEW moves to crack down on a legal loophole that has seen Scotland advertised as a tax haven across Eastern Europe are being considered by the UK Government.
Security Minister Ben Wallace said the system had “clearly” been abused, adding: “We want to make sure that does not happen”.
It came as the Tory minister praised a series of articles in The Herald highlighting the use of Scottish Limited Partnerships (SLPs) as “the truest form of good investigative journalism”.
Read more: Unregulated web cash transfer systems 'using Edinburgh shell companies as fronts'
But the SNP accused the UK Government of being too slow to act on the issue.
This newspaper has revealed how Scotland is being widely promoted as a tax haven in Russian- language media.
SLPs registered in Scotland have been linked to major corruption scandals in the former Soviet Union.
Others have acted as fronts for international websites used to share child pornography.
In one case, a “limited partnership” company in Fife, the Brook Organisation, was named as part of an investigation into an £8 million turf war between the nephew of Uzbekistan’s authoritarian President Islam Karimov and a business rival.
Mr Wallace was speaking as MPs took evidence on the new Criminal Finance Bill currently going through Westminster.
Read more: Unregulated web cash transfer systems 'using Edinburgh shell companies as fronts'
The Herald’s chief reporter David Leask told the hearing that some would “pick on the weakest regulatory regime they can... and in the case of companies I’m sorry to say that is the UK.”
He said: “There is a reasonable case ... to take a detailed look at SLPs... and ask yourself whether you want Scotland and Britain to be linked to this behaviour.”
He also warned that because SLPs were seen as Scottish, they “bypassed” the tax haven blacklists many countries maintain.
Mr Wallace, a former MSP, said: “Can I thank The Herald for what you have done ... the truest form of good investigative journalism”.
“It is clearly a system whose structure have been abused and we want to make sure that that does not happen.”
Last night the SNP’s West- minster leader Angus Robertson wrote to Prime Minister Theresa May pressing for a meeting on SLPs.
Mr Robertson tackled the Conservative leader about the partnerships during Prime Minister’s Questions in the House of Commons a fortnight ago.
Read more: Unregulated web cash transfer systems 'using Edinburgh shell companies as fronts'
At the time she indicated she was willing to meet him, but SNP sources said he had heard nothing since.
In his letter he says: “I was pleased you agreed to meet me to discuss a joint way forward in tackling such crime.
“It is a matter of public record that SLPs have acted as fronts for websites peddling child abuse images, and that they have been part of major corruption cases in Ukraine, Uzbekistan and Latvia, including in the arms industry.”
But, he added: “Any progress we have seen from your Government has been too slow, and I am keen we arrange a meeting with urgency, preferably in advance of the Autumn Statement.”
There are about 25,000 SLPs registered in the UK.
They do not pay tax in the UK if they do not trade here.
Their owners are attracted by the fact they can remain secret, file no accounts and pay no taxes.
The SNP has urged the UK Government to use the bill to review SLPs, and the party’s Treasury spokesman Roger Mullin has raised a number of cases in the Commons.
The campaign has attracted widespread support with Labour, Liberal Democrat and Green party politicians, as well as aid charity Oxfam and the Scottish Government calling for Westminster to reform SLPs.
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