11th April 2022Register of Overseas Entities: What you need to know

The UK Government has introduced a ‘Register of Overseas Entities’ following The Economic Crime (Transparency and Enforcement) Act 2022 which was passed into law on 14 March 2022.

The new rules require all overseas entities that own or buy land or property in the UK to register with Companies House and record the entity’s beneficial owner(s). Each such entity will, once it registered with Companies House, become a “registered overseas entity.” The requirement aims to prevent individuals hiding their property ownership behind chains of obscure shell companies.

Who will be affected?

The new rules will apply to overseas persons who invest in UK land and property, this includes:

  • An overseas company or partnership or other similar legal entity
  • An individual who is the beneficial owner of an overseas entity a person will be a beneficial owner of an entity if they:
    • directly or indirectly hold more than 25% of the shares or voting rights in that entity;
    • have the right to appoint or remove the majority of the directors of that entity; or
    • have the right to exercise, or actually do exercise, significant influence or control over that entity.

When will this come into effect?

  • The rules will apply retrospectively to land or property bought up to 20 years ago in England and Wales, and since December 2014 in Scotland.
  • Implementation will proceed at pace following Royal Assent of the Bill

What will you need to do now?

  • An overseas entity will need to identify its beneficial owner(s) and register with Companies House in the UK. HW Fisher can assist you in complying with this requirement.
  • Once registered, an overseas entity ID number will be issued, and the entity will need to submit annual statement to Companies House.

It is not clear at present how the process of registration will work in practice, but we would recommend providing us with the relevant information to ensure that the necessary registration is completed to avoid any penalties from arising.

To register, the entity will need to supply the following information:

  • name;
  • country of incorporation or formation;
  • registered or principal office;
  • a service address;
  • an email address;
  • the legal form of the entity and the law by which it is governed;
  • any public register in which it is entered and, if applicable, its registration number in that register.

In addition, the information required in respect of the beneficial owner(s) is as follows:

  • name, date of birth and nationality;
  • usual residential address;
  • a service address;
  • the date on which the individual became a registrable beneficial owner in relation to the overseas entity;
  • which of the definitions of a beneficial owner is met in relation to the registrable beneficial owner and a statement as to why that condition is met;
  • whether the individual meets that condition by virtue of being a trustee;(g)  whether the individual is a designated person (within the meaning of section 9(2) of the Sanctions and Anti-Money Laundering Act 2018), where that information is publicly available.

Other points to note:

  • any foreign entity selling properties between 28 February 2022 and the full implementation of the register must also submit their details at the point of sale; as well as filing the relevant tax returns and paying any tax due;
  • failure to comply with the Act’s registration obligations will constitute a criminal offence for both the entity and, importantly, each officer of that entity. The offence will be punishable by a daily fine (not exceeding £2,500), imprisonment of up to five years, or both; and
  • the Secretary of State may exempt a person from registration if she considers that it is necessary to do so “in the interests of the economic wellbeing of the United Kingdom.”

Should you have any questions in relation to above, please do not hesitate to get in touch with us.

Key contacts

Jamie Morrison HW Fisher

Jamie Morrison
Partner

020 7874 7983
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Jie Su
Private Client Tax Manager

+44 (0) 20 7380 4925
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