Companies House holds the new Register of Overseas Entities, which requires overseas entities that own land or property in the UK to declare their beneficial owners and/or managing officers. Those who do not comply will face severe penalties, including restrictions on buying, selling, transferring, leasing, or charging their land or property in the UK.
The New Register of Overseas Entities came into effect on August 1, 2022. This means that any foreign entity wishing to buy, sell, or transfer land or property in the United Kingdom must first register with Companies House.
This legislation was introduced as part of the new Economic Crime (Transparency and Enforcement) Act 2022, and it also applies retroactively, dating back to 1999 in England and Wales and 2014 in Scotland.
If you qualify as an overseas entity and make any transfers, purchases, or sales of land or property after those dates, you must act before January 31, 2023.
This guide explains whether the new register covers you and, if so, what steps you must take.
What exactly is an Overseas Entity?
An overseas identity is any legal identity with a recognised legal structure, such as LLPs, non-UK partnerships, and foreign foundations.
The Act will apply to any non-UK incorporated company, even if the company is a UK tax resident.
Any legal entity with a legal personality not governed by the laws of the United Kingdom is likely to qualify as a legal entity and must therefore apply to the register for property and land transactions.
Any organisation or business that meets the criteria for an overseas entity must disclose information about its beneficial owners and/or managing officers.
Why Was the Register Established?
The Register of Overseas Entities (ROE) has been described as the “first of its kind,” It aims to increase transparency in all property and land transactions.
The requirement to disclose ownership and purchase sources is intended to prevent property transactions in the United Kingdom from being used as a mechanism for money laundering. The ROE, which is aimed at elite money laundering, will not allow shell companies to be used to hide criminals who use property transactions to process their illegal cash.
The ROE is launching just in time to help the government identify and prosecute Russian oligarchs who have used the UK to hide their illicit wealth.
All information must be verified, and the record is believed to make the UK property market less appealing to unscrupulous persons looking to hide illicit funds.
This registry is just one of a slew of new powers granted to Companies House, which were first revealed in February 2022. It is envisaged that by enacting these restrictions, severe organised crime will suffer in the United Kingdom, as they will no longer be able to use property to launder money.
The register will be open to the public and free to view.
Retroactive Applicability
Although the ROE was only established on August 1, 2022, its powers apply to all forms of property transactions.
Any property purchased in England and Wales since 1999 or in Scotland since 2014 will be subject to the new registration restrictions.
Furthermore, properties disposed of since February 2022 will be subject to the registry to catch any companies that have taken avoidant action. This means that even if a foreign entity no longer owns property in the United Kingdom, if it was sold after February 2022, it must still register.
A six-month transition period allowed all overseas entities to file their registration application. All qualifying property transactions must be recorded before January 31, 2023.
Failure to register a property transaction within the register’s scope has serious repercussions. A fine of up to £2,500 per day and a prison sentence of up to five years might be imposed. Furthermore, future transactions involving the purchase, sale, transfer, lease, or charging of United Kingdom land or property will be restricted.
Utilizing the Register of Overseas Entities (ROE)
If your property transactions must be recorded, you must supply Companies House with verifiable information.
The application must contain details on the legal entity, its beneficial owners, and, in some cases, the managing officials. The information required varies depending on the structure. Still, it often includes name, date of birth, nationality, address, nature of control, and whether the person/entity is listed on a UK sanctions list. Any overseas registrations on which the entity or individual appears may also be necessary.
To achieve maximum transparency, the information required is purposefully comprehensive. There is a £100 application fee, and a United Kingdom-regulated agent must validate the information. This verification must take place no more than three months before the application deadline to the ROE.
Although you need to supply a large amount of information to make sure that the application is accepted, not everything will be made public. Sensitive information, such as home addresses or full dates of birth, will not be displayed. Email addresses and details of any trust will also be kept private.
What Happens After You Submit an Application?
If your application is not accepted, your £100 will be reimbursed, and you will be notified of the following stages. You cannot conduct any property transactions if your application is not accepted. If you do, the acquisition will not be legally recognised.
If the application is approved, all of the parties named in it will be added to the ROE. An Overseas Entity ID will be issued to the overseas entity, which must be presented to the Land Registry whenever a property or land transaction occurs in the United Kingdom.
The overseas entity must provide an update to the registry once a year. This guarantees that the information is kept up to date. If there are any modifications, the register can be updated sooner.
If a party is no longer registered as a property owner in the United Kingdom, they can be removed from the register. However, because the legislation governing updates and removals has not yet been implemented, further information regarding this procedure will be shared in due course.
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