Scotland calls on UK government to reform SLPs

Scotland has asked the UK government to reform laws allowing for a Scottish business vehicle to be used for tax evasion. Finance Secretary Derek Mackay has asked UK ministers to change the law so that criminals who use Scottish Limited Partnerships may be exposed while preserving the vehicle for “legitimate business”. In a letter to Greg Clark, Secretary of State for Business, Energy and Industrial Strategy, Mr Mackay said: “I would welcome your support in how we can ensure that SLPs are not seen as an easy means to achieve their criminal goals. “I recognise it will be important to secure the right balance whereby we do not get rid of the many benefits that are offered to legitimate businesses through SLPs, but it is important that we are not seen as a haven for those who wish to pursue criminal activity.” In February, Justice Secretary Michael Matheson said he was “very open” to a review of Scottish limited partnerships (SLP) which are being advertised as business vehicles for tax avoidance in Eastern Europe. Unlike English partnerships, SLPs need not register for tax or provide financial reports if they conduct business abroad. Mr Matheson confirmed he would look into the practice. He 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. “We need to make sure that the legislation that is in place is operating as effectively as possible.” His remarks came after it was revealed last year that SLPs were used to defraud Moldovan banks of $1 billion – with the companies registered to housing schemes. Last October, BBC Radio 4’s File on Four programme investigated the issue and found 530 firms registered to a flat in the Pilton area of Edinburgh.