SCOTTISH limited partnerships (SLPs) hold a unique place in the world of business. They have their own separate legal personality, and allow for minimal filing requirements and interaction with UK authorities.
When first introduced in 1907, and for more than a century, they were used for agricultural tenancies. That light touch has made them popular with companies, investors and pension funds.
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But, in the past decade, they’ve increasingly become a tool for organised crime.
The rules governing SLPs mean a partner can be based anywhere – even tax havens like the British Virgin Islands, Panama, Jersey, the Bahamas and the Seychelles.
In Scotland, a firm is a legal person distinct from the partners of whom it is composed, while an English partnership is considered instead to be a collection of its partners with no separate legal personality.
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There has been a boom in the years since the financial crash, with the number of SLPs rising by 23,625 (430 per cent) between 2007 and 2016.
There were more SLPs registered in 2016 than there were in the century between 1907 and 2007.
Reportedly, 71 per cent of those, around 3677, were controlled by companies registered in tax havens or secrecy jurisdictions.
Between 2010 and 2014, around 113 SLPs were used in the world’s biggest and most elaborate money laundering scheme – the Russian Laundromat – to smuggle between $20 billion and $80bn out of Russia.
Despite their name, the laws governing SLPs originate in Westminster.
The Herald newspaper has been investigating the scheme for some time now, repeatedly exposing the use of the shell companies, prompting SNP MPs to campaign for a change in laws.
The UK Government seem likely to act, with No 10 telling Ian Blackford she would like to “take things forward”.
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