Overseas owners of UK property may be affected by the new measures being introduced.
We’ve written a blog to give you an overview of the government’s policy paper factsheet which explains the Register of Overseas Entities in detail.
Why is the register being introduced?
The government’s introducing the register to provide transparency and crack down on foreign criminals using UK property to launder money. Anonymous foreign owners of UK property will be required to reveal their identities.
It forms part of the government’s strategy to combat economic crime, while ensuring legitimate businesses continue to see the UK as a great place to invest.
What will the register do?
The ‘Register of Overseas Entities’ will:
- help tackle money laundering through UK property
- require anonymous foreign owners of UK property to reveal their real identity to ensure criminals can’t hide behind secretive chains of shell companies
- 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 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 apply to foreign owners of UK property, including:
- 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 in the form of financial penalties are being introduced 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.
This is expected to have a major dissuasive effect.
What will an overseas entity have to do who owns or wishes to own land in the UK?
An overseas entity will be required to identify its beneficial owner(s) and to register them with Companies House. Information supplied to the register will be required to be verified.
Once registered, an overseas entity ID number will be provided and the entity will be required to update its information annually, until such time as it successfully applies to be removed from the live Register of Overseas Entities.
To register title to land, an overseas entity will have to demonstrate it is registered and must comply with the duty to update information.
When will this come into effect?
Implementation will ‘proceed at pace’. It is expected to go live in December 2022.
How Hallidays can help
If you think your business interests may be affected, our team are here to advise and support you with the new requirements. Please speak with your usual advisor or contact us on 0161 476 8276 or email [email protected] to learn more.