Register of Overseas Entities Owning UK Property

The UK Government has recently published a draft of the Economic Crime (Transparency and Enforcement) Bill 2022 which will introduce a ‘Register of Overseas Entities’ owning UK property.

What is the government doing and why?

The government claim the aim of the introduction of the Register is to crack down on foreign criminals using UK property to launder money.

The Register will require foreign owners who own UK property indirectly through offshore entities to reveal their identities to ensure criminals cannot hide behind chains of companies.

This measure forms part of the government’s strategy to combat economic crime.

How is the government going to do it?

The government claim that the Register will:

• provide more information for law enforcement to help them to track down those using UK property as a money laundering vehicle
• level the playing field with property owned by UK companies, who already need to disclose their beneficial owners to Companies House
• impose sanctions for non-compliance, including restrictions on registering or disposing of the title of the land
• apply retrospectively to property bought since January 1999 in England and Wales and since December 2014 in Scotland

Who will this apply to?

The measures will apply to:

• any company or similar legal entity that is governed by the law of a country or territory outside the UK (overseas entity)
• individuals who have significant influence or control over the entity, e.g. they hold 25% or more of the shares or voting rights (beneficial owners)

What will happen if they don’t comply?

If a foreign company does not comply with the new obligations, its managing officers can face criminal sanctions, including fines of up to £500 per day or a prison sentence of up to 5 years. Civil sanctions will also be introduced in the form of financial penalties and an overseas entity will face restrictions when trying to sell or lease their land.

If they are already registered, they will face restrictions over dealing with their land.

What will an overseas entity have to do who owns or wishes to own land in the UK?

An overseas entity that owns or intends to buy land in the UK will have to identify its beneficial owners and to register them with Companies House. Information supplied to the register will have to be verified.

Once registered, the overseas entity will be provided with an ID number which will be required to register its title to land. The information will also need to be updated annually.

When will this come into effect?

It is anticipated that the Register will be up and running later this year.

How can we help?

If you own a UK property through an offshore entity, now may be the time to consider whether this is still the most appropriate structure for you. We can advise on the tax position and also on getting UK properties out of such structures if that is what is desired.

Furthermore, if you are considering acquiring a UK property, we can advise on the various options for ownership available.

Gherson can also help with a wide range of other tax and estate planning matters.  We also have extensive experience of working with HMRC and dealing with HMRC investigations.

The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Gherson accepts no responsibility for loss which may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please do not hesitate to contact Gherson. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Gherson.

©Gherson 2022

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