Brexit win for UK as it leads fight on shady tax havens

The government has refused to adopt a controversial European court ruling that threatened to play into the hands of tax evaders.

In an unexpected Brexit advantage, Britain will continue to lead Europe in the fight against wealthy individuals and companies using secret tax havens to stash their wealth.

Britain could have complied with a ruling by the European Court of Justice (ECJ) last year that the right to privacy prevails over the public’s right to know who owns a business. But after Brexit, the UK is no longer obliged to agree to decisions by the Court of Justice. After The Mail on Sunday drew attention to the matter, the Department for Business said the public would now continue to have free access to documents at Companies House.

“I welcome the decision,” said Dame Margaret Hodge, who chairs an anti-corruption committee of MPs. “Knowing the identity of people who own and control companies is the first and most important step towards a stronger economy. Sunlight is the best disinfectant to keep fraudsters, traffickers, kleptocrats and oligarchs at bay.

The Court of Justice case was brought by a Luxembourg businessman, Patrick Hansen, who runs the private jet company Luxaviation, which has counted wealthy Russians among its clients. Several of his planes were grounded after the invasion of Ukraine led to sanctions against oligarchs. Critics say that the abuse of tax havens allows for large-scale economic crime. The UK’s approach is in stark contrast to EU member states, including Ireland and the Netherlands.

After the Court of Justice ruling, they rushed to deny the public access to company property records.

Dan Neidle, founder of the non-profit Tax Policy Associates and whose investigation into Nadhim Zahawi’s financial affairs forced him to step down as chairman of the Conservative Party last month, said there is a “powerful case” for transparency. He said that publicly available corporate ownership records “send a strong signal that black money is not welcome,” adding: “They also significantly increase the risk for tax evaders, sanction-breakers and criminals.” Even if the authorities don’t see you, a nerd with a laptop can.”

The government’s decision puts pressure on UK tax havens in the Channel Islands and the Caribbean to follow suit. They promised to open their registers for public scrutiny by the end of this year, but are using the ECJ ruling to drag their feet.

Offshore financial centers contacted, including Jersey and the Cayman Islands, said they were still considering the ECJ ruling.