PHANTOM firms to help Eastern Europeans avoid tax are registered at a Scottish Enterprise building in the heart of Edinburgh.
Controversial off-the-peg “Scottish offshore companies” are for sale in Ukraine for less than $1,000 (about £680) using a prestigious address owned by the publicly funded jobs quango.
Clearly marketed for tax avoidance, the “ready-made” shell companies are registered at Conference House, 152 Morrison Street, which, until last year, was the postal address of the Edinburgh International Conference Centre (EICC).
Scottish Enterprise (SE) confirmed last night it owned the building, which is let to legitimate “virtual office” business Regus. An SE spokeswoman said: “Taxation is a matter for the Scottish and Westminster governments.”
The revelation that Scottish companies used as tax-avoidance instruments were being registered at government properties came after Justice Secretary Michael Matheson, pictured below, signalled SNP plans to close a legal loophole that is feared to have made Scotland a soft touchfor global money launderers.
Mr Matheson’s concerns come more than six months after controversial Scottish Limited Partnerships (SLPs), which, unlike English firms, do not need to provide financial accounts or register for tax, were alleged to have been used as part of a billion-dollar Moldovan bank fraud.
There is no suggestion that the EICC, Scottish Enterprise or Regus had anything to do with SLPs or tax avoidance in Ukraine or elsewhere in Eastern Europe.
A Regus spokesman said: “We take our legal obligations very seriously, have extensive checks before we take on any customers, and have invested heavily in state-of-the-art compliance software.
“We do not tolerate any use of any parts of our business centres by people or companies that do not fully abide by the law.”
The Morrison Street-registered businesses are being sold on the website of a Ukrainian brokerage as part of a wider service providing offshore services.
The broker recommends that investors use their Scottish firms in conjunction with those in more traditional tax havens such as Panama or Belize. It offers to find “nominal” directors. Companies House documents seen by The Herald suggest these are mostly women from the Seychelles.
The broker, one of several in Kiev, also offers to provide ready-made firms in more classic offshore jurisdictions, which then become the owning shareholders, or, “members”, of the SLP.
Provided the SLP or another offshore Scottish company does not trade in the UK, no tax is payable, the Ukrainian broker claims.
SLPs and other offshore shell companies are legal, although the Scottish Law Commission called on the UK government to reform them more than a decade ago.
However, it is understood senior Scottish law enforcement figures are worried about the abuse of SLPs as part of international crime.
Asked about SLPs, Justice Minister Michael Matheson said: “I am very open to looking at whether there is a need to improve the legislation and, if necessary, to make representations to UK ministers.”
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