A Comprehensive Guide to the New Registration Requirements for Overseas Owners of UK Property
Time to take action now
Since the introduction of the Economic Crime (Transparency and Enforcement) Act 2022 earlier this year, we have been waiting for signs of when the new Register of Overseas Entities would be introduced.
- The government have announced that the new register of overseas entities (ROE) will come into force at 9am on 1 August 2022.
As criminal offences may be committed for non-compliance with the requirement for overseas entities to register certain details (including those of the beneficial owners) to Companies House, it is time to take action now.
Below, we explain what has changed, who you need to identify, what information is required to enable you to register and how we can help you.
What has changed since the enactment of the Economic Crime (Transparency and Enforcement) Act 2022?
The three new statutory instruments have been introduced:
- The Register of Overseas Entities (VPI) Regs 2022
- The Land Registration (Amendment) Rules 2022
- The Register of Overseas Entities (Delivery, Protection and Trust Services) Regulations 2022
In essence, an overseas entity will need to gather evidence and information required under the 2022 Act and forward this to an independent verification officer in the UK. The verification officer will then submit an application to Companies House to add the relevant entity to the register which will generate a unique Overseas Entity ID code.
Who needs to register?
The beneficial owner of any overseas entity (being a corporate body, partnership or other legal person) governed by the laws of a country or territory outside of the United Kingdom that owns, leases or disposes of qualifying real estate.
For the purposes of the Economic Crime (Transparency and Enforcement) Act 2022 a beneficial owner could be:
What are the timelines from when the register goes live?
- Overseas entities who already own qualifying property in the UK (excluding Northern Ireland where different rules apply) acquired at any time on or after 1 January 1999 will have 6 months from the date the register becomes live to register with Companies House.
- Overseas entities acquiring freehold property or a lease granted for 7 years or more in the UK will be required to register with Companies House as soon as the register becomes live.
- Overseas entities that have disposed of qualifying property (by sale of a freehold or the grant or assignment of a lease with 7 or more years in term or the grant of a legal charge) between 28 February 2022 and 6 months from the date the register goes live.
What information is required before registration can take place at Companies House?
Schedule 1 of the Economic Crime (Transparency and Enforcement) Act 2022 sets out the required information needed in order to register the beneficial interest at Companies House as per the below table.
An overseas entity may give an information notice to any person that it knows, or has reasonable cause to believe, is a registrable beneficial owner in relation to the entity.
The notice will require the person to whom it is given to state whether or not they are a registerable beneficial owner (and then provide the information above). The overseas entity may also give a person an information notice if it knows or has reasonable cause to believe that the person knows the identity of a person who is a registrable beneficial owner in relation to the overseas entity, any other beneficial owner in relation to the overseas entity, a person likely to have knowledge of the identity of a person falling into either of the first two categories.
It is an offence for the person served either notice not to; respond or to give false or make reckless statements. The person, subject to a summary conviction may face subsequent imprisonment.
The Secretary of State also has powers to require an overseas entity to apply for registration within a period of 6 months of the date of the notice. Again, sanctions apply for non-compliance.
In addition to the above, the overseas entity must also deliver one of the following three statements regarding its registerable beneficial owner and provide the relevant evidence to back up the statement as follows:
If either statement 2 or 3 above applies, then further information is required as to the “managing officer” (a director, manager, secretary). Part 4 of Sch 1 of the 2022 Act requires the additional following information to be provided in relation to the managing officer:
Who submits the information and how?
The register will be a digital service with information to be submitted in English.
Before any application for first registration or later updating applications/rectifications and amendments can take place, the information above will be subject to formal verification by a relevant person (being one falling within section 3 and 8 of The Money Laundering Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017). Broadly, a relevant person will include an independent legal professional, financial institutions, auditors, estate agents, auction platforms etc.
Once the information has been verified the relevant person will need to confirm to the Companies House Registrar that it has completed verification in accordance with the new Act and regulations and provide a statement complying with Part 2 (5) of The Register of Overseas Entities (VPI) Regulations 2022. If the relevant entity has made no relevant dispositions between 28 February 2022 and the date the application is made, the application must state this.
The information itself is to be retained by the relevant person for a period of 5 years.
What happens once registration is accepted?
Companies House will then publish the identity on a public register and assign a unique Overseas Entity ID. The name of the relevant entity and their agent will be available to the public on the Companies House website. The Overseas Entity ID will be required by the Land Registry before it registers any dealings with real estate in England & Wales.
The 2022 Act requires registered entities to update their information annually.
Secondary legislation allows individuals to be able to protect some of their information from public disclosure in limited circumstances (if it can be shown an individual or the people they reside with will be at serious risk of violence or intimidation).
Failure to comply with registration and/or within the time limits imposed?
In England and Wales a person guilty of an offence is liable on summary conviction to a daily fine of up to £2,500 or unlimited fines and a prison sentence of up to 5 years. Failure to register will also prevent any dealings with the real estate in question.
What can we do to help you?
We appreciate the above information is a bit of a mine-field especially as we are expecting further amendments to the legislation in the next few weeks.
We can keep you up to date of the latest developments, assist and advise you on your obligations and aid in collecting the required information. If you require, we can also verify the required information for you and make the application for registration to Companies House and communicate the unique Overseas Entity ID number to you as well as process annual returns.
If you have any questions and/or would like advice on the UK public register of beneficial ownership of overseas entities, please speak to Kuldip Matharoo in the Dixcart office in the UK: email@example.com