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In March 2022, legislation was rushed through the UK Parliament to introduce the Register of Overseas Entities owning UK land (ROE). The new measures are intended to increase transparency and the effect is wide ranging.
If you own UK land (including residential or commercial properties) through overseas entities, such as companies and trusts, you will need to check and understand the registration requirements, paying particular attention to the retrospective effect of the measures and who is considered a beneficial owner. We set out certain key aspects of the ROE.
What is the ROE and to Whom Does It Apply?
It is a new register that will list details of the beneficial owners of all overseas entities that own UK residential or commercial property. The register will be publicly accessible at Companies House.
The registration requirement applies to all overseas entities purchasing UK property going forward.
The measures have retrospective effect whereby overseas entities that acquired property (in England and Wales) after 1 January 1999 will need to register as well.
Property sales by overseas entities since 28 February 2022 will also need to be registered.
What Is an Overseas Entity?
An overseas entity is a legal entity that is governed by the law of a country or territory outside the UK including entities formed in the Channel Islands and the Isle of Man. A legal entity includes companies, LLPs, foreign foundations and non-UK partnerships with legal personality.
Non-UK trusts are not ‘overseas entities’ but will need to provide some information including name of the settlor, type of trust, jurisdiction of the trust and name of the trustee to the Companies House.
How Will It Work?
An overseas entity owning UK property is required to register the details of its beneficial owners. Once registered, an ID number will be provided. Without an ID number, the overseas entity will be prevented from buying, selling or effectively dealing with its UK property in the future.
There is also a requirement to update the information annually and when there are any changes.
An overseas entity has 6 months from the date the legislation comes into force to comply with the registration requirements. It has not come into force as Companies House and the UK Land Registries are currently putting in place the register. There is political pressure to get the register up and running as soon as possible.
Who Is a Beneficial Owner?
The definition is wide. It includes people who hold directly or indirectly more than 25% of the shares or more than 25% of the voting rights in an overseas entity. It can also capture anyone who has the right to exercise, or actually exercises, significant influence or control over the overseas entity.
Will the Register be Public?
Yes. Information about the overseas entity and beneficial owners will be publicly available on the Companies House website. This includes names and date of birth of beneficial owners.
Where the UK property is owned by an overseas entity which is held under a non-UK trust, the name of the trustee (as the beneficial owner) may be publicly known. However, other information about the trust (including details of the settlor, beneficiaries and other interested persons) will not be available to the public but can be accessed by the UK tax authority.
Failure to register, submitting false information and transferring land in breach of the registration requirements is a criminal offence for the overseas entity and its officers. Penalties include fines of up to GBP 2,500 a day or a five-year prison sentence.
If you own UK residential or commercial property through an overseas entity, then please seek advice as soon as possible on the registration obligations. Careful analysis needs to be undertaken on the entities and persons who will be considered beneficial owners for the purposes of the ROE.
Partner, Spencer West
Hilesh is a Solicitor of the Senior Courts of England and Wales based in London. He provides advice on UK personal taxation matters, trust law and succession planning. He regularly works with UK and international families, entrepreneurs, beneficiaries and trustees.