Dive into the world of PAYE investigations. Uncover the facts, implications, and insights in this informative blog
On 1st August 2022, the new Register for Overseas Entities came into force. This means that any overseas entities who want to purchase, transfer or sell land and property in the United Kingdom has to first register with Companies House.
This legislation has been launched under the new Economic Crime (Transparency and Enforcement) Act 2022 and also applies retrospectively, backdating to 1999 for England and Wales and 2014 for Scotland.
This means that if you qualify as an overseas entity and made any transfers, purchases or sales of land or property from those dates onwards, you will need to take action before 31 January 2023.
This guide explains how to identify if you are covered by the new register, and if so, what you need to do.
What is an Overseas Entity?
An overseas identity is any legal identity which has a legal structure which is recognised, such as LLPs, non-UK partnerships and foreign foundations.
The Act will apply to any non-United Kingdom incorporated company, even if they are a United Kingdom tax resident.
Any legal entity which holds a legal personality and is not governed by the laws of the United Kingdom is likely to quality as a legal entity, and hence must make an application to the register for property and land transactions.
Any organisation or business meeting the criteria for an overseas entity must disclose information regarding their beneficial owners and/or managing officers.
Why Has the Register Been Created?
The Register for Overseas Entities (ROE) has been described as the “first of its kind” and is a bid to ensure that all property and land transactions are made more transparent.
The requirement to disclose ownership and sources of purchase is intended to prevent United Kingdom property transactions being used as a mechanism for money laundering. Aimed at elite money laundering, the ROE will not allow shell companies to be used to shelter criminals using property transactions to process their illegal cash.
The ROE launches in time to support the government’s drive to identify and root out Russian oligarchs who have used the United Kingdom to disguise their ill-gotten wealth.
All information presented must be verified, and it is hoped that the register will ensure the United Kingdom property market becomes less of a target for corrupt individuals trying to hide illicit funds.
This register is just one of a sweeping range of increased powers being handed to Companies House that were first announced in February 2022. It is hoped that by introducing these measures, serious organised crime will take a hit in the United Kingdom with no way to use property to launder money.
The register will be open to everyone and freely accessible to view.
Although the ROE was only launched on 1 August 2022, its powers extend further back for all types of property transactions.
Any property purchased since 1999 in England and Wales or 2014 in Scotland will be subject to the new register rules.
In addition, to catch any entities who have taken avoidant action, properties disposed of since February 2022 will also be subject to the register. This means that even if an overseas entity no longer holds United Kingdom property, if it was disposed of after February 2022, they must still register.
A six-month transitional period has been granted to allow all overseas entities to submit their application to register. All property transactions which meet the criteria must be registered by 31 January 2023.
There are serious consequences for failing to register a property transaction which falls under the scope of the register. A fine of up to £2,500 per day could be levied, plus a possible prison sentence of up to five years. In addition, restrictions will be placed on any future transactions which involve buying, selling, transferring, leasing or charges on United Kingdom land or property.
Applying to the ROE
If your property transactions need to be registered, you will need to provide verified information to Companies House.
The application must include information about the legal entity itself, its beneficial owners and in some cases, the managing officers. The data required varies depending on the precise structure but broadly covers name, date of birth, nationality, address, nature of control and whether the person/entity appears on a UK sanctions list. Details of any overseas registers the entity or individual appears on may also be required.
The information required is deliberately comprehensive to ensure complete transparency. There is an application charge of £100 and the details must be verified by a United Kingdom-regulated agent. This verification must take place no more than three months prior to the date of the application to the ROE.
Although extensive information must be submitted for the application to be accepted, not everything will be visible publicly. Sensitive data will not be displayed, such as home addresses, or the full date of birth. Email addresses and the details of any trust will also be hidden from public view.
What Happens After an Application?
If an application is not accepted, the £100 will be refunded and you will receive communication explaining what the next steps are. You cannot carry out any property transactions if your application has not been accepted. If you do, the acquisition will not be recognised in law.
If the application is accepted, all of the parties included in the application will be added to the ROE. The overseas entity will receive an Overseas Entity ID. This must be supplied to the Land Registry every time a property or land transaction takes place in the United Kingdom.
Every year an update must be provided to the register by the overseas entity. This ensures the information is kept accurate. It is possible to update the register sooner if any changes occur.
Parties can be removed from the register if they are no longer registered as a property owner in the United Kingdom. However, the legislation governing updates and removals has not yet been enacted so more information will be available about this process in due course.