Update – Register of Overseas Entities is live

On 15 March 2022, the Government announced that overseas entities who held UK property needed to register with the Companies House. This Register went live on 1 August 2022 and the overseas entities must comply with the requirements within 6 months , i.e. by 31 January 2023. A failure to comply can have serious ramifications.

Who is affected?

This Act requires any ‘overseas entity’ to register details of its ‘beneficial owners’ on the Register of Overseas Entities held by Companies House if that entity:

• already owns a freehold property or leasehold property (acquired at any time since 1 January 1999);

• wishes to acquire a freehold or leasehold property; or

• wishes to dispose of (or has, since 28 February 2022), disposed of) a freehold or leasehold property.

For the purposes of this Act, leasehold property is one where the lease was originally granted for more than seven years.

An ‘overseas entity’ is a legal entity ‘governed by the law of a country or territory outside of the UK’. This includes:

• non-UK incorporated companies
• LLPs
• foreign foundations and
• non-UK partnerships with a legal personality.

Offshore trusts owning UK land directly are not required to register with Companies House, as they must already be registered through the Trust Registration Service. However, offshore trusts which own UK property indirectly through an overseas entity will be caught by these rules.

Time deadlines

• The new Register of Overseas Entities went live on 1 August 2022, which means that overseas entities can now apply to Companies House to be admitted to the Register.

• The property-related provisions came into force on 5 September 2022 and as a result HM Land Registry have started placing restrictions on the titles of freehold property and leasehold property owned by overseas entities.

• There is a transitional period of six months from 1 August 2022 (i.e. up to 31 January 2023) to give the overseas entities the opportunity to comply with the registration requirements.

Ramifications if you don’t comply

• If the overseas entity was registered as the owner of the property before 1 August 2022, the restriction will prevent them from dealing with the property after 1 February 2023 unless they are registered at Companies House by that date.

• It will now not be possible for an overseas entity to become the legal owner of a freehold property or leasehold property (with a lease of more than seven years) unless at the time of the Land Registry application, it has registered with, and provided relevant information to, Companies House.

• Failure to comply with the provisions of this Act may result in the entity itself and its officers to face criminal liability reinforced through tough penalties.

Who can facilitate this process?

• The information submitted as part of the overseas entity’s application to register at Companies House must be verified by a ‘relevant person’ who must be a UK-regulated agent supervised under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017.

• The agent will need to request an assurance code from Companies House – this confirms that the agent has authorisation to file the verification checks statement for an overseas entity. The overseas entity cannot be registered without this code.

• As accountants and tax advisers, we are permitted to fulfil the role of the ‘relevant person’ and we are able to assist you with this regulatory obligation. Please contact us for further information.

Further explanation of Overseas Entities Register rules can be found in our previous article ‘New transparency rules for overseas entities owning land in the UK’.