Lawyers warn register of controlling interests could deter super-rich

Lawyers have warned that plans to reveal who owns Scotland’s land could deter “some highly respectable – and respected – investors” who require “commercial discretion” from investing in Scotland, The Herald reports.

Under the Land Reform (Scotland) Act 2016, a register of “persons of controlling interests” is to be established with details possibly being disclosed by Registers of Scotland.

But HBJ Gateley partner Alison Newton has said such changes must be handled carefully.

She said: “There’s a growing trend for wealthy overseas investors to consider Scotland as a stable and attractive place to invest in property – that creates and protects jobs, as well as enabling investment in property assets.

“Better transparency is always a good thing, but that has to be set against the wishes of some highly respectable – and respected – investors for an element of commercial discretion.

“The last thing we want to do is create a regime where foreign investors feel unwelcome, especially at a time when confidence remains patchy in the domestic market.”

Burness Paull partner Richard Rennie agreed with Ms Newton that some investors might be put off by the register and said that the Scottish government is being “over simplistic” in saying those who do not want to reveal their identities should not invest in Scotland.

“Many of the ‘super-rich’ who have invested in estates or commercial investments in Scotland could be put off by the need to provide information on who holds controlling interests in vehicles used to purchase these properties,” he said.

“In response, the government are likely to say that if you are not prepared to say who you are, then you shouldn’t be investing in Scotland anyway.

“That response is, of course, over simplistic and fails to appreciate that those who buy behind the cloak of an offshore trust or corporate body usually have legitimate reasons for keeping their activities confidential.

“However, it is clear that the current focus for international co-operation and attack on tax evasion using offshore havens means that Scotland will not be the last country to try to open up its land ownership records to establish who really owns the country.”

The Scottish government seeks views on a definition of “controlling interest” as well as the kind of land the legislation should govern.

Ms Newton said: “Consulting comprehensively with people who know the sector inside out will help the legislation to tread the right line between deterring corruption and attracting valuable and very welcome foreign investment on a level playing field.”