The details of anyone owning a UK property in their own name have always been publicly available for land registered in England and Wales, Scotland and Northern Ireland.
Since 6 April 2016, all UK companies must provide details of all “persons with significant control” to Companies House which will add them to the publicly accessible “PSC” register.
Since 6 October 2020, most trusts (including most bare trusts or nominee arrangements) which acquire UK land from must register with HMRC’s online register of trusts (called the “TRS”) and provide detailed information on the trust – even if they have not incurred any UK tax liability, which also triggers the requirement to register on the TRS. Registration is required by 1 September 2022 for trusts which trigger registration requirements before then or else within 90 days of the trigger event.
Trusts (and substantial estates of deceased persons) which incur UK tax liabilities must also register with the TRS. Information on the TRS is not usually publicly available although HMRC and other public bodies can access it. There are some exceptions from the requirement for trusts to register on the TRS, but the rules are complex and specific advice on their potential applicability should be sought.
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A public register for overseas corporate owners of UK land was originally proposed in 2016 and a draft bill was published in 2018. After some changes, this was enacted within a few days in March 2022 as the Economic Crime (Transparency and Enforcement) Act 2022. The Act will require all “Overseas Entities” (“OEs”) which intend to acquire, dispose of or mortgage UK land (or already own it) to provide details of all “registerable beneficial” owners (“RBOs”) on a register administered by Companies House.
Failure to comply with the legal obligations under the Act will risk fines, imprisonment and civil penalties and being prevented from registering transfers of the UK real estate on the relevant UK Land Register.
The Act contains a lot of detail, and it will be supplemented by regulations and guidance, both of which are yet to be seen. Even the date of the first deadline for registration is not yet currently known, as this runs from 6 months after certain regulations yet to be published come into force.
From the end of this 6-month period, a restriction is entered on the relevant Land Register preventing any future disposal of the property unless the OE is registered on the Overseas Entity Register.
In the transitional period leading up to the registration deadline for OEs already owning UK land, any OE disposing of UK land from 28 February 2022 onwards must give details of any RBOs it had immediately before that disposal.
It appears a disposal during the transitional period will not prevent a transfer of legal title at the relevant Land Registry if registration on the Overseas Entity Register has not been done beforehand. There are, however, substantial penalties if registration is not done by the end of the transitional period deadline.
The complexity of the Act and the wide range of structures which will be affected by the Act mean that specific advice should be sought on registrability of an OE, when that must be done by, who is treated as a RBO and what information must be submitted concerning the OE and its RBOs (if any). The following comments are therefore very much an overview of our understanding of some of the main features of the Act.
Firstly, is there an OE?
An OE is any entity governed by non-UK law and under that law has legal personality. The most obvious example is a non-UK incorporated company. However, other types of non-UK entity have legal personality, such as foundations and certain types of partnership.
Trusts, executors of deceased persons, attorneys, and other representatives of those lacking capacity, are legal relationships and not legal entities. However, if any trustee, personal representative, attorney (or equivalent) is a legal entity, then it seems it would constitute an OE for the purposes of the Act.
Is the OE registerable?
An OE is registerable if it has applied to be registered as the legal owner of qualifying land (from 1 January 1999 in England and Wales, from 8 December 2014 in Scotland and from the date the Act comes into force in Northern Ireland). Thus, records must be checked at least that far back. Qualifying land in England and Wales comprises freeholds and leases of more than 7 years.
The capacity in which the OE is registered as legal owner (i.e., as beneficial owner, trustee, bare trustee or nominee) does not appear to matter.
Who is an RBO?
An RBO (broadly) is any individual, legal entity or trust with more than 25% of OE shares, OE voting rights, ability to remove most or all of the OE’s governing body or other significant control over the OE.
What are the OE’s obligations?
The OE must ascertain if there are any RBOs and request from them the information concerning them which must be submitted to the Registrar. If there are no RBOs, details instead must be given of the OE’s ‘managing officers’, such as its directors, managers and secretaries.
The OE must also make certain declarations concerning enquiries it has made concerning RBOs etc.
An RBO whose details are already on another public register, such as the PSC Register at Companies House, will not have to register again.
The Register must be updated, within 14 days of each anniversary of the first registration.
It seems an OE which is a trust (or estate) which must register on TRS as well as on the OE register.
What will appear on the Register?
The register would contain certain information on the OE itself, on any RBOs (and if no RBOs, then on the OE’s “managing officers”).
Individuals’ residential addresses and their full date of birth and details on trusts, for example would not though be available to the public, although HMRC and designated public bodies would have access to that information. The Secretary of State can exempt on national security grounds.
What should OE’s do now?
The Land Registry will compile a list of properties it regards as held by OEs and then impose a restriction on the title on disposing or mortgaging unless registered from the registration deadline date.
Whilst that deadline is still at least 6 months away, anyone who thinks they may be affected by the Act would be prudent to identify any OEs which hold qualifying UK land from the relevant dates and start collating information on the OE and any RBOs/ managing officers required to register.
Any OE which is in the process of disposing of UK land from 28 February to the end of the transitional period, must register before the Land Registry will register that transfer.
Companies House is still implementing the Overseas Entities Register and is not currently able accept any applications for registration. Details of the procedure and any registration fee are still awaited.
Gateley have also produced notes on UK real estate structuring options and UK tax issues for overseas UK real estate investors, which complement this note and contain some additional tax and other information.
Click here to read more.