With a fast approaching deadline of January 31, overseas entities holding UK properties are being encouraged to register beneficial owners or managing officers with Companies House.
At a BVI Finance Breakfast Forum on January 11, representatives from HM Revenue & Customs (HMRC), the Department of Business, Energy and Industrial Strategy (BEIS) and Companies House gave an overview of the Register of Overseas Entities (ROE) and the relevant tax implications.
The ROE, established by the UK Economic Crime Transparency and Enforcement Act, 2022, applies to any land bought or leased in England and Wales, since January 1999, in Scotland since December 2014, and in Northern Ireland since September 5, 2022.
According to Companies House, close to 95,000 UK properties are owned by 32,000 owned by non-UK incorporated entities or Overseas Entities in more than 200 countries. Twenty-thousand entities are incorporated in Isle of Mann, Jersey, Guernsey and BVI, and own £178-billion of UK property.
Overseas entities will not be able to buy, sell, transfer or lease land, or create a charge against the land in the UK unless they’ve registered with Companies House. After registering, the name of the overseas entity and its beneficial owners will be publicly available on the website “Companies House - Find and Update Company Information Service”.
Registration and Verification
Speaking about the registration and verification process, Rachel Watts, the ROE Policy and Implementation Lead at Companies House said that approximately 12,000 overseas entities have already registered and that the primary responsibility to input info in register lies with the entities.
While noting that there is much online technical guidance as to how to use the registration service, Ms. Watts said it is “quite complex and likely to take time” and advised that it is best to start as soon as possible.
Ms. Watts explained that the information provided when registering must be verified by an independent UK agent or “Relevant Person”, according to the legislation. Verifiers must register with Companies House to be confirmed as verification agents. Ms. Watts said that in understanding that finding a verifier can take some time, Companies House proactively published a list of verification agents online at www.gov.uk.
The turnaround time for entities being registered depends on who is making the application. Applications by verification agents are usually two days, while registrations by overseas entities making the applications on their own usually take two weeks; awaiting letters from verification agents.
According to Ms. Watts, there was a relatively high number of rejections earlier on for various reasons, including inconsistent or incorrect information. Ms. Watts said entities should factor in the possibility of rejection into the registration time frame, to ensure they meet the deadline.
While the UK law does not provide any extension to the transitional period, Ms. Watts said that Companies House will consider any mitigating circumstances if proof is provided that attempts were made to comply before the deadline.
Trusts and ROE Non-Compliance
In giving an overview of ROE, Jacqueline Griffiths, ROE Policy Lead at the BEIS Department, explained that all companies registering must provide information on the Registrable Beneficial Owners (RBO’s).
She explained, “Where RBOs are beneficial owners in their capacity as trustees of trusts - or equivalents of similar legal arrangements - overseas entities must also provide information about the trusts, such as settlor or beneficiary.”
Ms. Griffiths explained that trust information is not published on the register, neither are residential addresses. Trust entities in the UK are private, generally because trusts are usually used for vulnerable persons, according to Ms. Griffiths.
Where offence is committed, further non-compliance could result in £2,500 pounds of daily fines. Who is liable to penalties? Ms. Griffiths said this is determined on a case-by-case basis, and depends on the offence and who is deemed to have committed the offence.
The BVI Finance Breakfast Forum also included presentations by Carl Wilkins - HMRC Offshore Lead for Public-Private Relationships, who gave an overview of the HMRC’s ‘No Safe Havens Strategy - 2019’; and Sebastian McVicker-Orringe CTA - HMRC Lead on the Register of Overseas Entities and Related Tax Non-Compliance, who expanded on the Offshore Corporates Property Programme that derived from the HMRC strategy.
Mr. McVicker-Orringe also discussed the impact of the ROE as it pertains to HMRC, and the data exchange with Companies House. He stated it is the first time the HMRC will have clear insight into many complex structures. He said the main aim is to encourage compliance, adding, “Where structures or individuals don’t come forward, HMRC will use the data to risk and target them for compliance activity.”
For further information please contact:
Adrianna Soverall
Marketing and Media Relations Coordinator
asoverall@bvifinance.vg |Tel: 284-852-1957