What is the Register of Overseas Entities legislation?
Ian Dodge, Senior Tax Manager at Johnsons Chartered Accountants London provides an overview of the new Register of Overseas Entities legislation that came into force on 1 August 2022.
Register of Overseas Entities on 1 August 2022 launched by Companies House
What’s is the new Act about?
The Economic Crime (Transparency and Enforcement) Act 2022 requires overseas entities (companies, partnerships, foundations, etc) that own UK land or property to declare their beneficial owners and/or managing officers.
Trusts that directly hold UK property are not required to register, as their beneficial ownership will already be registered on the Trust Registration Service.
Does this affect my overseas entity?
The Act will apply to land or property bought since 1 January 1999 in England and Wales (or 8 December 2014 in Scotland) and to land or property purchased from the day the Act came into force (1 August 2022) in Northern Ireland. Companies incorporated in the Republic of Ireland fall under the definition of an overseas entity.
What is required?
Officers of ‘overseas entities’ will be required to take reasonable steps to identify the beneficial owner(s) of, and UK property held in the entity, and provide these details to a publicly available register at Companies House. This information will need to be verified by a UK Supervised Agent (as defined by the Money Laundering Regulations) and an annual return will need to be completed to confirm any updates to the register.
Once an overseas entity no longer holds UK property, it can request to be removed from the register.
As a defined UK-supervised MLS agent, Johnsons Chartered Accountants can assist and oversee your entity’s responsibility to adhere to the new legislation and ensure compliance is met.
What are the repercussions and where does the entity stand with UK Law?
It is highly likely that HMRC (and other UK agencies) will use the new register to aid their investigations into tax fraud and money laundering. This information will be examined in depth and compared to their existing datasets, including information received from other jurisdictions via the Common Reporting Standard.
There will be severe sanctions for those who do not comply with the new regulations, including restrictions on buying, selling, transferring, leasing or charging their land or property in the UK.
Failure to comply is also a criminal offence and, as such, the officers of the entity could face up to two years’ imprisonment (five years in extreme cases).
What should you do?
You will need to discuss with your beneficial owners whether continued ownership of UK property still meets with their objectives and, if so, whether ownership in the current structure is the most appropriate and beneficial.
If you have any queries or need any assistance with this new legislation, contact our Tax Advisors, at Johnsons Chartered Accountants Ealing.