The Economic Crime (Transparency and Enforcement) Act 2022 (the Act) received Royal Assent on 15th March 2022, this being one of the steps towards the government’s agenda to increase transparency. The Act introduced a new requirement for overseas entities that own/hold UK property to register the details of all beneficial owners with Companies House, thus making it a matter of public record. The requirements are designed to prevent people concealing their ownership of UK property by using an overseas entity as a holding company.
A beneficial owner is someone who has share ownership or voting rights of more than 25% along with all directors of the entity. The key point is to be able to identify the beneficial owner(s) to ensure that they are UK-tax compliant.
The requirements of registration apply to freehold property and land and leaseholds of 7 years and more which have been owned by overseas entities since 1st January 1999. If an overseas entity has disposed of land in England and Wales or Scotland since 28th February 2022, a statement must be provided in their application.
Corporate owners must inform Companies House of the beneficial owners who have significant control and influence since the property’s purchase.
The Register of Overseas Entities (the Register) will be held and maintained by Companies House, but HMRC will have access to much more information than what is published.
All relevant entities must make an application for registration by 31st January 2023. Non-compliance is a criminal offence and can result is a fine, prison sentence or both. HM Land Registry is currently writing to overseas entities to make them aware of the restriction but as the timeline is short there is concern deadlines will be missed!
The EU Court of Justice has declared in November 2022 that such unfettered public rights of access to registers of beneficial ownership constitute a serious interference with a right to a private life and the protection of personal data. Although the UK is no longer bound by EU Law, the European Convention on Human Rights remains incorporated into UK law and the UK government may be put under pressure to restrict the level of access to data provided on the Register. This is unlikely to affect the requirement to provide the information by the 31st January 2023 deadline.
Once registered, there is a continuing obligation to update the Register by filing an annual statement which would either confirm no change in beneficial ownership or will provide the information confirming the relevant change.
For further information on the issues raised, please contact our expert property solicitors Tania Austin or Sarita Ghere on the details below.