Should I choose, for recreational reasons and shielded from public view by the thick walls of Maugham Towers, to wear a diving mask and snorkel I might reasonably assert a right to privacy in relation to that choice. Should I step, thus dressed, into the formal gardens of Maugham Towers I might maintain it still. But should I fail to de-snorkel before wandering up to the newsagents, my reasonable claim to privacy would vanish.
There is a right to privacy. A good right. One that can be found in most attempts to articulate what basic human rights look like. But this post isn’t an attempt to describe the law of privacy. The questions I want to pose concern the shape the right to privacy should take.
My mooted enjoyment of diving gear may or may not be a matter of public curiosity but for so long as I choose to confine that enjoyment to a private sphere the public has no right to know. But the right is contextual. I can waive it by my actions. I can make choices that alter the balance between my right to privacy and such passing curiosity as the public may possess. By those choices I can denude of value my claim to privacy. We may collectively hold that it is better that we preserve the rights of those who wish to take photographs outside a newsagents than the claims to privacy of those who choose to shop at them.
A week or so ago Alexi Mostrous, the Times journalist who has made so many of these stories his own, wrote about Tony Blair’s rather complex personal finances. Those arrangements were said to be set up for reasons of privacy:
And yet what is clear is that an arrangement whereby Mr Blair simply chose to receive the money directly – without the interposition of any company, or partnership or trust structure – would have provided the nearest thing the law offers to perfect privacy. So one should approach with scepticism any contention that this arrangement was about privacy. Because the choices Mr Blair made reduced rather than enhanced it.
No tax justice campaigners of which I am aware campaign for the public disclosure of income or gains that individual (lawyer-speak for ‘real’, like you and me) taxpayers enjoy. There is a reason for this. It is because the most natural arrangements – Y provides X with income where Y and X are individuals – is adequately able to be taxed. That arrangement is inimical to avoidance and any sophisticated form of evasion.
It is when we choose to create and interpose legal structures – trusts, partnerships, companies and variants thereon – between X and Y that there arise the conditions within which avoidance and evasion can occur. Of course, often or usually we choose to interpose those structures for good reasons. Trusts provide a mechanism for protecting the assets of the vulnerable. The limited liability attaching to companies encourages us to indulge the animal spirits that cause us to create businesses and generate wealth.
But there is no good reason why we as a society should not attach to the choice of these legal structures a price – an enhanced degree of public scrutiny – for using them. Charging a price does not breach anyone’s right to privacy. It is the choice to use them – to walk to the newsagents – that carries the concomitant loss of privacy.
I would go further.
Where we know that those structures create the conditions within which behaviours inimical to the interests of broader society – such as tax evasion and avoidance and money laundering – can occur, society should charge a price for using them, especially where that price is designed to reduce the risk of those behaviours.
Of course, we should think sentiently about what that price should be. It should reflect the legitimate uses to which those structures are put. And also the risks that they create. And it should be mindful of assertions of privacy that legitimately serve – for many do not – the public interest.
But having made the decision about what that price looks like, it is right that it be paid.
Some of the media coverage of the Panama Papers might suggest that the thinking I have outlined above is heretical. But it is not heretical – it is not even new. Rather, we have just forgotten it.
Let me take one of many examples.
Section 113 of the Companies Act 2006 creates an obligation on the part of companies to maintain a register of shareholders which is available to the public. The entitlement on the part of the public to examine this information can be seen as a price in reduced privacy that attaches to the use of a company structure. Hold assets through a company and the public should know.
Is this price qualitatively different from the apparently contentious proposal that there be public registers of beneficial ownership of companies?
I don’t think so.
There is, it seems to me, only one explanation for a state of affairs that has section 113 on our statute books but rejects the notion of public registers of beneficial ownership of companies. That explanation is that we have lost sight of why we introduced the rule now to be found in section 113. What possible purpose is served by a provision that obliges a transparency that we now allow to be occluded?
Let me sum up.
Many assertions that to do X or Y would breach the privacy of Z misdiagnose the cause of Z’s loss of privacy. On analysis, it is the choices that Z makes not the doing of X or Y that occasion that loss. Society should weigh in the balance its broader interests when it sets the conditions under which Z can choose to use structures that create the conditions within which avoidance and evasion can occur. None of this is heretical – or even new.
A clear eye towards principles that should be uncontroversial. A review of trust law and company law and partnership law with these principles in mind. Measures – easily found – to secure that the purpose of these principles by UK residents is not subverted by the use of non-UK structures.
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