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Oct. 5, 2021

Pandora’s box opened – who would hold property offshore now?

The global media attention given to the Pandora papers - only 4 years after the Panama papers - has again brought the use of offshore tax havens under the spotlight.  The structures may well still be legal, but with a pincer movement of uncomfortable media activity and coordinated G7 action on tax loopholes globally the question remains for how long? The good news is that a solution already exists and can be used today – no new legislation needs to be waited for.

IPSX answers the problem for offshore funds that are looking for a UK-listed venue with all the benefits that brings. IPSX Wholesale can host a range of corporate structures for institutional grade income-producing assets, developments and regeneration projects alike. That might be a £400m office portfolio with a couple of cornerstone investors, a £1bn retail park or it might be a government-backed £200m hospital development.

IPSX wants to ensure that real estate owners, from both the public and private sectors, can choose to be quoted in an onshore, tax transparent market and benefit from as much flexibility as possible. As such, there is no prescribed minimum free float on admission, owners have the option of combining their assets and, once admitted, they can opt for REIT status – giving the best possible tax efficiency without the reputational risk of using offshore tax havens.

The statements from the IA and AREF have been encouraging, and the OECD’s framework around base erosion and profit shifting (BEPS), published two years ago, would go some way toward making it increasingly inefficient to be offshore.  At last, the response to tax avoidance is being met with concerted action from an industry, at national and international level.  These conversations have been a long time coming, but we recognise that we need to continue to act as an industry to ensure that alternatives are not just proposed, they are fully implemented. Remarks by G7 finance ministers around the tax deal designed to close loopholes seem to recognise the need for momentum. “This is a starting point” said the French Finance minister before adding “In the coming months we will fight to ensure that this minimum (15%) corporate tax rate is as high as possible”.

IPSX Wholesale is one of those solutions that is ready to go.  After years of working on this alternative to offshoring, IPSX Wholesale went live with its first issuer in May 2021. I would encourage property owners to explore admission on IPSX Wholesale as we continue to push for greater flexibility, governance and transparency for real estate in the UK.