Improving Transparency in the UK – But at What Cost?
19 July 2019
David Innes, Geoffrey Kittredge, John W. Rife III, Patricia Volhard, Kirsten Watson, Simon Witney
The UK is one of the quickest and cheapest places to incorporate a company, offering same-day registration services, facilitating off-the-shelf companies and imposing no minimum capital requirements. That is generally regarded as an important factor in its attractiveness as a place to set up and run a business – see, for example, the 2019 World Bank Doing Business Survey, which awards the UK ninth place overall. (New Zealand, Singapore and Denmark top the table, with the United States in eighth place.)
But being able to set up a company quickly and cheaply is clearly only one factor in a country’s attractiveness to entrepreneurs, and the UK seems likely to face some challenges with some of the other criteria in the near future. In that context, it does not seem like a good time to add regulatory barriers to the incorporation and corporate reporting processes for small and medium-sized companies – and the UK government’s consultation on “Corporate Transparency” appears to be poorly timed. Issued in May, and with a return date of 5 August, the government’s proposals – heralded as the most significant reform of the UK’s company registration framework since 1844 – would add some important delays and administrative burdens.
On the other hand, these changes would have quite a long lead-time, and the UK government is rightly concerned about the growing problem of economic crime. If the UK’s business-friendly policies are being exploited by criminals, they do need to be looked at again, and initiatives to fight money laundering and terrorist financing must take centre stage.
The trick, of course, is to strike the right balance. Policy-makers need to make sure that the burden of new measures falls in the right place. Well-targeted and proportionate interventions, using new and emerging technologies and safeguarding data security and individual rights to privacy, will be welcomed by market participants. Demands for additional information that go beyond what is necessary, or put obstacles in the way of normal business activities, will be regarded with scepticism.