Register of Overseas Entities That Own UK Property – An Update
Following the enactment of the Economic Crime (Transparency and Enforcement) Act on 15 March 2022, Companies House has confirmed the Register of Overseas Entities (“ROE”) will launch on 1 August 2022.
Our article explaining the registration rules introduced by the Act can be found here.
Overseas entities that own an interest in UK land acquired after 1 January 1999 (England and Wales), 8 December 2014 (Scotland), 5 September 2022 (Northern Ireland)
Companies House have confirmed they will soon be writing to all overseas entities captured by the Act.
Where an overseas entity already holds an interest in UK land, there is a 6 month transitional period beginning on 1 August 2022 during which they must register on the ROE and provide information regarding their beneficial ownership to Companies House. This means that, for existing landowners, all registration requirements should be completed before 1 February 2023 to ensure that they do not incur penalties.
Overseas entities acquiring an interest or making other dispositions involving UK land
Overseas entities looking to buy, sell, transfer or lease UK land, or create a charge against land in the UK will need to have applied to Companies House to be registered on the ROE and obtain an Overseas Entity ID before they can register the transaction at the Land Registry. The Land Registry will reject applications if the necessary ID has not been obtained.
An exception to this is where there is a transfer, lease or charge of UK land from an overseas entity that owned the land on 1 August 2022. In that event, the disposition can be registered without an ID, even though there is a restriction, if the application to the Land Registry is made before 1 February 2023.
At the time of writing, technical guidance has not been published by HM Land Registry and may not be produced until after the 1 August introduction date. However, it is understood that HM Land Registry will not require applications to include an ID until 5 September 2022.
Overseas entities that no longer own UK land but disposed of an interest in UK land after 28 February 2022
Where an overseas entity disposed of its interest after 28 February 2022 their details must be registered on the ROE and those details will remain on the ROE for two years.
The new owner of the UK land cannot register the transfer to his/her/its name without evidence that the overseas entity is on the ROE or falls within certain exemptions.
As well as announcing the introduction date for the ROE, an additional requirement has been introduced through The Register of Overseas Entities (Verification and Provision of Information) Regulations 2022.
Before an overseas entity can register on the ROE, the information that is provided to Companies House must be verified by a UK-supervised “relevant person”. This will be a UK-based person who is supervised under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 and may include independent legal professionals, auditors and external accountants and trust and company service providers. In order for their verification to be accepted, the verifier must first obtain an “assurance code” from Companies House.
The Law Society of England and Wales, the independent professional body for solicitors, has released an interim note to practitioners whom it to “exercise extreme caution [when] considering providing such verification” as verification for the ROE is not the same as usual client due diligence. Other professional bodies may follow their lead.
It is likely that this additional verification step will cause delays in the registration process until further guidance is released and clients should be aware of this.
What to do now?
We advise overseas entities or those who run them to take action now and:
- Seek professional advice to confirm their obligations if they believe that they may fall within the scope of the new rules
- Collect the information that will be required by Companies House in relation to their beneficial owners
- Contact advisors who can provide the required verification statement to Companies House and obtain their agreement to do provide such verification.
Third parties who are entering into transactions with overseas entities in respect of UK land should:
- Check whether the entity must be registered
- If it must and is not, ensure that this will occur
- Be aware that delays may be caused in completing the transaction.
The note is for general information only and does not constitute legal or tax advice on which you can rely. We would be pleased to assist if you require advice about your own or your clients’ affairs or particular circumstances.