In response to a need for greater transparency regarding the ownership of UK land and property, the Government has introduced a new requirement for Overseas Entities to register with Companies House.
The Register of Overseas Entities came into force on 1 August 2022 under the Economic Crime Act 2022, and it aims to align foreign entities with UK companies, who are already required to file annually with the registrar.
The Register of Overseas Entities in a Nutshell
Overseas entities who wish to buy, sell or transfer property or land in the UK, must now register with Companies House, their registrable beneficial owners or managing officers.
The register will be publicly accessible and the deadline for registration by overseas entities is 31 January 2023. (Having only commenced in August 2022, entities are being given a relatively short transition period.)
These new rules also apply retrospectively to overseas entities who bought property or land on or after:
- 1 January 1999 in England and Wales
- 8 December 2014 in Scotland
- All dispositions after 28 Feb 2022
The entity must provide basic information relating to itself (name, country of formation/incorporation, registered/principal office, service address, legal form and applicable governing law, details of any overseas public register which it is entered on and any registration number).
In order to maintain a valid Overseas Entity ID the entity will need to comply with its updating obligations, which include reconfirming the required information and statements to Companies House at least every 12 months.
As a valid Overseas Entity ID is needed to buy/sell any registered property in the UK, the requirement to keep records updated is a significant one.
What counts as an ‘overseas entity’?
An overseas entity is defined as legal entity that is governed by the law of a country (or territory) outside of the UK. This includes entities which were formed in the Channel Islands. Examples of legal entities include non-UK incorporated companies, LLPs and foreign foundations.
What is a Beneficial Owner?
A beneficial owner is defined broadly in the same way as Persons of Significant Control, and is
- an individual person
- another legal entity, such as a company
- a government or public authority
- a trustee of a trust
- a member of a firm that is not a legal person under its governing law
Who meet 1 or more of the following criteria in relation to the overseas entity:
- holds, directly or indirectly, more than 25% of the shares in the entity
- holds, directly or indirectly, more than 25% of the voting rights in the entity
- holds the right, directly or indirectly, to appoint or remove a majority of the board of directors of the entity
- has the right to exercise, or actually exercises, significant influence or control over the entity
Who will have access to the information collected for the register?
Although the register will be publicly accessible, Companies House will not disclose the day of the month on which an individual was born, or residential address/contact details of the individual. Information relating to trusts will not be publicly available either, although it may be passed to HMRC.
As stated above, overseas entities have until 31 January 2023 to submit their registration to Companies House.
Overseas Entities that do not comply with the new legislation in time could be liable to fines of up to £2,500 per day or a prison sentence of up to 5 years. The sanctions enforced would be relative to the level of non-compliance, for example a fine is more likely to be issued for failure to update the register, whereas providing a false statement could attract a prison sentence.
In addition, overseas entities will face restrictions when buying, selling, transferring, leasing or charging property or land in the UK, without the essential Overseas Entity ID which enables registration as the legal owner of property at HM Land Registry.
Support from a UK Regulated Agent
As a UK Regulated Agent, Kingston Burrowes Accountants can support overseas entity clients with the registration and we can certify that we have checked the necessary paperwork, as part of the registration and annual declaration process.
If you require support to register an Overseas Entity, please get in touch with the Kingston Burrowes team, who will be happy to support you with this process.
Full details regarding the new legislation and the process of registering an overseas entity, is provided by Companies House on the Gov.UK website.