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UK Register of Overseas Entities

An Outline of the UK’s new register of overseas entities under the Economic crime bill.

1 minute read

Published 9 August 2022

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Key information

On 1 August 2022, the UK’s new Register of Overseas Entities (the “ROE”) came into effect under the Economic Crime (Transparency and Enforcement) Act 2022. The ROE, which is maintained by UK Companies House and is available to the public, records details of the beneficial ownership of “overseas entities” which buy, sell, or transfer property or land in the UK.  An overseas entity for these purposes is “a body corporate, partnership or other entity that (in each case) is a legal person under the law by which it is governed.”

Commencement

The register applies immediately from 1 August 2022.  It also applies retrospectively to entities which have bought property or land in England and Wales on or after 1 January 1999 (other rules and dates apply for Scotland and Northern Ireland). Those entities which are now obliged to register must do so by 31 January 2023.

Additional information must also be provided for any entity which disposed of property or land after 28 February 2022. In future, HM Land Registry will be prevented from registering an “overseas entity” as a proprietor of registered property unless that entity has first obtained an “Overseas Entity ID”. From 5 September 2022, an overseas entity will also need an Overseas Entity ID before it is able to dispose of registered property.

Criminal sanctions for non-compliance

Failure to comply with this new registration requirement carries a penalty of up to £2,500 per day or a custodial sentence of up to five years, notwithstanding the restrictions on buying and selling land that arise from not possessing an Overseas Entity ID.

Trusts

If UK property is held via a trust, this does not itself give rise to a disclosure obligation because the trust is not an overseas entity.  However, if the trustee of such a trust is a non-UK corporate trustee (as is often, perhaps usually, the case), then the trustee may itself be obliged to disclose its own beneficial ownership structure in accordance with the principles summarised above.

Comment

 The UK has been increasing its reporting and compliance obligations on UK and overseas structures and that trend seems set to continue for the foreseeable future.  The ROE is just the latest example of that.  Given the number and complexity of the various reporting regimes, including the Register of Persons with Significant Control of companies, HMRC’s Trust Registration Service (which itself has recently been expanded in scope), and now the ROE, affected entities are likely to find themselves liable to report sensitive information to the UK Government under at least one – and sometimes several – of these regimes.  Navigating these overlapping requirements can be difficult for the owners and managers of relevant structures (who may not always know that a UK registration obligation has been triggered).

One significant difference between the new ROE and pre-existing schemes is that the ROE has specific – and extremely grave – criminal sanctions for non-compliance, which can include financial penalties and/or imprisonment.  The Government is clearly signalling its intention to come down hard on opaque property-owning structures.

Whether the severity of the punishments for ROE non-compliance is appropriate to the scale of the issue is anyone’s guess.

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Longer Reads

UK Register of Overseas Entities

An Outline of the UK’s new register of overseas entities under the Economic crime bill.

Published 9 August 2022

Associated sectors / services

  • International trusts, tax and estate planning
  • UK/USA Tax & estate planning

Authors

On 1 August 2022, the UK’s new Register of Overseas Entities (the “ROE”) came into effect under the Economic Crime (Transparency and Enforcement) Act 2022. The ROE, which is maintained by UK Companies House and is available to the public, records details of the beneficial ownership of “overseas entities” which buy, sell, or transfer property or land in the UK.  An overseas entity for these purposes is “a body corporate, partnership or other entity that (in each case) is a legal person under the law by which it is governed.”

Commencement

The register applies immediately from 1 August 2022.  It also applies retrospectively to entities which have bought property or land in England and Wales on or after 1 January 1999 (other rules and dates apply for Scotland and Northern Ireland). Those entities which are now obliged to register must do so by 31 January 2023.

Additional information must also be provided for any entity which disposed of property or land after 28 February 2022. In future, HM Land Registry will be prevented from registering an “overseas entity” as a proprietor of registered property unless that entity has first obtained an “Overseas Entity ID”. From 5 September 2022, an overseas entity will also need an Overseas Entity ID before it is able to dispose of registered property.

Criminal sanctions for non-compliance

Failure to comply with this new registration requirement carries a penalty of up to £2,500 per day or a custodial sentence of up to five years, notwithstanding the restrictions on buying and selling land that arise from not possessing an Overseas Entity ID.

Trusts

If UK property is held via a trust, this does not itself give rise to a disclosure obligation because the trust is not an overseas entity.  However, if the trustee of such a trust is a non-UK corporate trustee (as is often, perhaps usually, the case), then the trustee may itself be obliged to disclose its own beneficial ownership structure in accordance with the principles summarised above.

Comment

 The UK has been increasing its reporting and compliance obligations on UK and overseas structures and that trend seems set to continue for the foreseeable future.  The ROE is just the latest example of that.  Given the number and complexity of the various reporting regimes, including the Register of Persons with Significant Control of companies, HMRC’s Trust Registration Service (which itself has recently been expanded in scope), and now the ROE, affected entities are likely to find themselves liable to report sensitive information to the UK Government under at least one – and sometimes several – of these regimes.  Navigating these overlapping requirements can be difficult for the owners and managers of relevant structures (who may not always know that a UK registration obligation has been triggered).

One significant difference between the new ROE and pre-existing schemes is that the ROE has specific – and extremely grave – criminal sanctions for non-compliance, which can include financial penalties and/or imprisonment.  The Government is clearly signalling its intention to come down hard on opaque property-owning structures.

Whether the severity of the punishments for ROE non-compliance is appropriate to the scale of the issue is anyone’s guess.

Associated sectors / services

  • International trusts, tax and estate planning
  • UK/USA Tax & estate planning

Authors

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