Gladys

If you look at any records at the UK Companies House, there is a banner which says that the information is not verified.

I raise the fecking kids on those heely things in Tesco, on a Saturday with their parents but no apparent means of control. When my children were younger they had the heely things, but would I take them shopping? No way. It is like take your kids shopping with invisible skateboards. I have reached the age when I think a deftly placed foot, and then senile dementia is the only answer.

Thanks for that, Craggy, but there are some misinterpretations. A company is a legal person in law that is correct. Having said that, you have to understand what that means. Very simply, it is a party that can be challenged, in its own right in law. So, it can claim and be a defendant, in legal proceedings. The whole concept of a limited liability company is that it does have it's own identity legally. That does not mean it cannot be owned. But the concept is that the owners limit their liability against any claims to the amount of capital introduced. That is what limited liability means. Again, I go back to the history when the concept of a company was conceived to facilitate a risky adventure (venture) such as sailing to new found lands for trade. Many vessels would founder with not only the loss of the vessel, but possibly consequential loss of other interested parties, so the concept of a company would be that the investors had ventured substantial capital and without the protection of limited liability would probably never venture again. Having established the concept of limited liability, the law acknowledged the distinction between the investors and the managers, the directors , who owe a fiduciary responsibility to the shareholders. That duty has been broadened to include an obligation to stakeholders such as employees and creditors. So far, so good. Now we move to the idea of legal and beneficial ownership in the context of a company. A fundamental principle of company law is that the register of shareholders is the prima facie evidence of who the shareholders are, so as far as the company, ie the legal person is concerned, its owners are the names on that register. Pretty sure that most company legislation prohibits a company from recognising a trust on its register. Now we move to AML and other regulation, and there is the obligation to know not only the persons on the register, but the persons who may in fact be the true owner. So, while the register may show x , the regulated service provider knows and has documented that y is the true person that will ultimately enjoy the benefit of the company. Now, if the company's beneficial owner is in fact a nominee company (because a company cannot recognise a trust on its register) for the trustee of a discretionary trust with multiple beneficiaries, some of which may be named and others who may fall within a class, who is the beneficial owner? All that without going into the trust aspect. But the concept of controlling beneficiary does not address the underlying issue and, to be honest I am not sure that can ever be categorized. As I have said, I have no problem with disclosure, but it has to be of the right person. I have seen examples of the UK PSC register that just are mind boggling at how they could ever be considered as compliant. But, the UK CRO, has a clear statement banner on its site that it has not verified the information it holds.

It is also a "device" that I have never encountered. Rushen Spy's description is either not accurate or missing some vital elements.

Not unless you are named as a beneficiary.

Well answer it then.

Not really. Beneficiaries in receipt of benefit are already reported for CRS/FATCA. Even if the rules are that all beneficiaries should be named as BOs of a discretionary trust what do you say their interest is? See my example way above.

That , Phillip, is the dilemma and a question that Sultan and Rushen cannot answer.

I think I did say from the outset that I did not agree with who is currently deemed to be the BO of discretionary trusts. But that is what we have.

That was all my own work, Sultan. I would say the majority of trusts are discretionary. Protectors have limited powers.

The trust will exist, they are not "claimed". Bankerboy has explained the position correctly. In the case of a discretionary trust, there is no BO - there cannot be. That is the whole dilemma. And it is exactly that. If I can help, I will set out the history of trust law. It was originally an arrangement when the crusaders went off on the holy wars. Women could not hold property so the knight would sign over (settle) his assets to a trusted person to hold for the benefit of named beneficiaries in case he would not return. He would probably set some conditions. This created a new branch of law, equity, which is very different from the common law, contract, which applied at the time. Under the law at the time, if he gave his assets away, he had given them away, end of, and the person he had given them to could deal with them as he liked. So, the concept of a trust was born, where the trustee held the assets in law, but had fiduciary duties to follow the wishes of the settlor in dealing with those assets in the interests of the beneficiaries. He could not personally benefit as that would be a breach of trust. There is also a line of argument, that trusts were created to allow donations to the church, basically, in return for a place in heaven. I am not sure that I follow that, but it may have been the nascent origin of the broader concept. Trust arrangements are useful in many situations, succession planning where you want your descendants to benefit but want someone who can decide if the recipient is deserving, and charitable set ups are often trusts and so on. The important point is that the person giving the assets to the trustee alienates themselves from the assets, they no longer own them. In a fixed trust, for example, I give all my assets to the trustee to hold for X for when he reaches 25. That is a fixed trust as X has an absolute right to the assets. Then, there may be a discretionary trust where I give all my assets to the trustee to hold for the benefit of my descendants for when they need them - education, maintenance or other event. But I leave it to the trustee to decide, in their fiduciary capacity who should benefit bearing in mind the interests of all other beneficiaries. It is not obfuscation, but an understanding of what a trust is.

There is no requirement for a register of BOs for a trust, the BO register relates to companies, which is why this is a point of debate. Hope that clarifies.

Correct and the CSP is supposed to have the due diligence to properly identify the UBO.

Well, it adds a lot when you think about it. You have a discretionary trust with four named beneficiaries, the trust fund in £1m, none of the beneficiaries has received a penny. Who is the BO, and of how much - all of it each or £250 000 each? None of them have an entitlement just an expectation and providing the trustees have discharged their fiduciary duties correctly, no beneficiary could force the trustee to make a distribution. So, in the same example, one beneficiary receives a distribution of £100,000. That is already reportable under CRS/FATCA. Do you then report the other three as the BOs of the remaining £900,000? It is not straightforward.

Even though I said I was out, I am back in. The point with a discretionary trust is that there is no BO, because they are discretionary. As Phil says, to get the desired reporting, there will have to be some compromise position which will offend the purists. I am not against disclosure but it has to have some grounding in the legal position. In my example above, you have still not said who the BO is, the old lady or the 3 year old?