31 January 2023 deadline for registering overseas entities owning UK land

Who must register?

Overseas entities that hold land purchased in England and Wales from 1 January 1999 must provide information to Companies House about itself and its beneficial owners by 31 January 2023.

Overseas entities not already registered, that wish to purchase UK land going forward, must register before they’re permitted to register their title on the land registry.

If an overseas entity has sold UK property since 28 February 2022, it must make a statement to Companies House about the sale and the land in question.

The Register must be updated annually.

What is an ‘overseas entity’?

An overseas entity is defined as a legal entity governed by the law of a country or territory outside of the UK, including a company, partnership or other entity that is a legal person under the law by which it is governed.

What is a registerable beneficial owner?

There are three types of potential registerable beneficial owner - individuals, governments and public authorities, and other legal entities. They will, broadly, be a registerable beneficial owner where they hold, directly or indirectly, more than 25% of the shares or 25% of the voting rights in an overseas entity. If they’re able to appoint or remove a majority of the board of directors or exercise significant influence or control over the overseas entity, they will also be considered a beneficial owner.  

If a potential beneficial owner has the right to exercise, or actually exercises, significant influence or control over the activities of an entity which is not a legal person under the law by which it is governed (e.g. a trust) and that entity meets one of the previous conditions, they are a beneficial owner.

Where there are no registerable beneficial owners, the overseas entity must provide details of its managing officers.

Do trusts need to register?

Trusts are not within the scope of The Register and as such, trusts which hold UK land directly do not have to register. However, if a non-UK corporate trustee holds UK land directly, the corporate trustee will be an overseas entity and will be required to register.  

If a corporate trustee meets one of the conditions above making it a registerable beneficial owner of an overseas entity which holds UK land, details of the trustee will need to be supplied along with details of the settlor, beneficiaries and other persons with certain powers over the trustee.

Information notices to identify beneficial owners

An overseas entity must take reasonable steps to identify its registerable beneficial owners and obtain the required information. This includes issuing an ‘information notice’ to a person it knows or believes is a registerable beneficial owner. The person must respond to the notice within one month. Not complying with a notice or making a false statement is a criminal offence and can result in a fine and/or imprisonment.

What information must be disclosed on The Register?

The overseas entity must provide basic information about itself (name, address, country of incorporation, contact details etc.). It must also submit a statement setting out what information it has been able to gather about the beneficial owners (or managing officers) and provide this information.

Some of the information supplied to Companies House must be independently verified and this can only be done by certain persons e.g. lawyers, accountants and tax advisers. Where information is required to be verified, it must be done on the basis of documents or information obtained from a reliable source, which is independent of the person whose identity is being verified.

What information can the public see on The Register?

Although The Register is public, not all information will be available for public inspection. For example, dates of birth and residential addresses of registerable beneficial owners will not be available, among certain other information.

If a trust is a registerable beneficial owner, information regarding the trust, its beneficiaries, current or past beneficial owners, settlors, grantors and interested persons must be provided. However, this information will not be available publicly and it will only be shared with law enforcement and other public authorities.

How to register

A Companies House online account must be created and information relating to the entity, its beneficial owners and the person that completed the verification checks must be provided, as well as the contact details of someone that can discuss the application. It costs £100 to register.

Consequences of non-compliance

Non-compliance can result in a daily fine of up to £2,500 per day or a prison sentence of up to five years.

In addition, restrictions will be put in place to prevent certain transactions from being undertaken in relation to the UK land e.g. the sale of the land. There will also be restrictions placed on registering land on the land registry. This may impact on the term of any borrowings secured on the UK land.

Given the consequences of non-compliance it's vitally important that offshore entities holding UK land consider the new rules carefully and take steps to comply with them at the earliest opportunity as the deadline coincides with the annual tax return filing deadline.

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