Retrospective registration to the government’s new scheme is essential to avoid hefty fines and jail time for those in breach of the revised rules.
If you are part of an overseas entity that owns property or land in the UK, then it’s crucial that you keep reading. On 1 August 2022, new legislation came into force designed to “crack down on dirty money… and root out corrupt oligarchs and elites attempting to hide ill-gotten gains through UK property” - but it could cost businesses thousands of pounds in fines per day - or even up to five years in jail - if you fall foul of the new requirements.
Critically, this doesn’t just apply to new or prospective foreign entities who wish to purchase land or property on Britain’s shores - it is also retrospective. As a result, any overseas entity that has purchased UK-based property since 1 January 1999 (or 8 December 2014 for those with property in Scotland) must register with the new scheme by 31 January 2023 or risk fines of £2,500 per day - and other significant penalties limiting trade.
Speaking of the scheme, Business Minister Lord Callanan said: “By getting this first of its kind register up and running at breakneck speed, we are lifting the curtain on those criminals attempting to hide their illicitly obtained wealth.”
Companies House Chief Executive Louise Smyth said: “The launch of this new register is a significant milestone in the history of Companies House and marks a turning point in our transformation as we look to play a much greater role in tackling economic crime.”
Clearly, we are fully in favour of interventions which can effectively root out criminals hiding money in assets within the UK, but making this change retrospective will, in our view, also give honest investors only a short window in which to avoid a heavy financial penalty.
If you are a registrable beneficial or a managing officer of a UK property-owning overseas entity, you must register with the Register of Overseas Entities (RSE) within the next few months.
According to Gov.UK, the RSE is “held by Companies House and requires overseas entities that own land or property in the UK to declare their beneficial owners and/or managing officers. There will be severe sanctions for those who do not comply, including restrictions on buying, selling, transferring, leasing or charging their land or property in the UK”
You will need to ensure that the registrable beneficial owners or managing officers undergo extensive validation checks before your entity can be officially approved and registered. This process is supervised under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 and they can only be carried out within three months prior to your registration date.
The rules vary depending on the type of entity (for example, an individual person, public authority, trust or trustee) but it typically means members of the company that hold, either directly or indirectly, 25% of shares or voting rights within the enterprise.
Anyone who holds significant influence within your organisation could feasibly fall under this umbrella, so make sure you speak to an agent about any concerns or questions you might have in identifying those liable.
It is absolutely essential that you do.
There is a small fee of just £100 to sign the register - which might put off some businesses - but the potential consequence of not doing so is a fine of up to £912,500 per year and even up to 5 years in prison. You’ll also face restrictions when buying, selling, transferring, leasing or charging property or land in the UK - which could significantly hinder your enterprise in the long run.
For peace of mind and to avoid problematic pitfalls, get in touch with our dedicated team today. Our team can undertake every element of the registrations and required verification checks on your behalf.