Affluent Indians who used offshore companies to buy apartments and mansions in the UK are coming under the glare of the Enforcement Directorate (ED). While resident individuals are allowed to remit up to $250,000 a year to directly purchase properties abroad, acquiring stocks of foreign companies that primarily hold properties is a violation of foreign exchange regulations. Nonetheless, well-off Indian families, under the impression that such deals would never come to light, have over the years bought shares of companies owning properties to escape stamp duty, capital gains, and even inheritance tax. While the British government has plugged the tax loopholes, certain tax advantages of controlling properties through companies remain. The identities of the owners behind the companies are now surfacing more and more due to a combination of factors: ED enquiring about the actual assets underlying the overseas stock investments declared by the resident Indians in their income tax (I-T) return and the UK mandating the disclosure of beneficial ownership (BO) details since 2023 of companies possessing properties. Over the last one month at least four individuals have received notices from ED for owning shares of companies which in turn own properties. These companies are either based in the UK or in other jurisdictions. It is a widely shared perception that a greater scrutiny of property owners, particularly individual buyers --- their identities, nationalities, source of funds --- followed the huge Russian money chasing London properties and the US sanctions against Russia. Though avoiding capital gains and inheritance tax is no longer possible, a lower or nil stamp duty is still applicable when shares of a company owning property are transferred. Also, in many cases the shares of such companies are owned by trusts and the beneficiaries of the trust can manage to remain unnamed.
 

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