Ukrainian tax-dodge ‘shell firms’ registered at Scottish Enterprise building

Michael Matheson
Michael Matheson

A company selling so-called ‘phantom firms’ to help Eastern Europeans avoid taxes is registering its ‘shell companies’ at an Edinburgh building owned by tax-payer funded Scottish Enterprise, it has emerged.

According to the Herald newspaper, controversial off-the-peg “Scottish offshore companies” are for sale in Ukraine for less than $1,000 (about £680) using the prestigious address owned by the publicly funded jobs quango.

The newspaper claims the firms are ‘clearly marketed for tax avoidance’, with the “ready-made” companies 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 news comes just a day after Justice Secretary Michael Matheson revealed SNP plans to close a legal loophole that is feared to have made Scotland a soft touch-for global money launderers.

The newspaper report said that 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-ofthe-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 cited by the newspaper 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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