Background

A prospective purchaser of property in the UK will ask what taxes they will encounter. One of the taxes is Stamp Duty Land Tax or shortly known as “SDLT” . You must pay SDLT if you buy a property or land over a certain price in England and Northern Ireland. The tax is different if the property or land is in Scotland or Wales.

In July 2020 the UK government published draft legislation that saw a 2% Stamp Duty Land Tax surcharge (“the surcharge”) being applied to purchases of residential property in England and Northern Ireland from 1 April 2021 by overseas buyers.   Also introduced was a new residency test linked to the timing of a transaction and dependent upon whether the purchaser is UK resident or non-resident.

The surcharge will not apply to commercial property.

So, how does it work?

The surcharge will be levied on top of all other SDLT payable, including the higher levels of SDLT introduced in April 2016 on second homes and buy-to-let purchases. Looking at this in simple terms:

Property value or lease (with over 21 years left to run) premium or transfer value	Residential property SDLT payable by UK residents	Residential SDLT assuming a second property (or more) – a surcharge of +3%	Non-resident – a surcharge of +2%
£40,001 to £125,000	zero	3%	5%
the next £125,001 – £250,000	2%	5%	7%
the next £250,001 – £925,000	5%	8%	10%
the next £925,001 – £1.5 million	10%	13%	15%
the remaining portion above £1.5 million plus	12%	15%	17%

To which non-UK residents will the rules apply?

There are a number of exclusions that apply and businesses with complex ownership structures will require careful consideration when assessing whether the surcharge applies.

At their simplest, the rules will apply to the following:

• if the purchaser (or any one of the purchasers) is an individual outside the UK for at least 183 days out of 365-day period beginning 12 months before the transaction and ending 12 months after (in which case the surcharge is payable at the point of acquisition but a refund can be applied for);
• certain unit trusts and Jersey Property Unit Trust, having regard to the status of the trustees;
• a company not resident in the UK for corporation tax purposes;
• a company that is resident in the UK for corporation tax purposes but is a close company and controlled by a non-UK resident individual(s) and is not a UK real estate investment vehicle nor group member of one, nor a Jersey property unit trust;
• a partnership where one of the partners is treated as non-resident; and
• where UK property is to be held in a trust, the residential status of the beneficiary is considered, failing which the residency tests are applied to the trustees themselves.

It is important to note, the surcharge will apply to a transaction where any one of the joint purchasers is non-UK resident. This applies to a spouse too. If buying jointly but one spouse works outside of the UK, the surcharge will apply.

Land transactions where contracts are exchanged before the 10 March 2020, but not completed or substantially performed until or after 1 April 2021, are likely to be subject to transitional rules

What is not covered?

The surcharge does not cover:

• purchasers claiming multiple dwelling relief (requiring the purchase of no less than 6 dwellings).
• overseas buyers buying off-plan who then “flip” the property onto a UK resident who enjoying sub-sale relief from the surcharge.

Further information

If you have any questions and/or would like advice on any Commercial Property, please contact us at: hello@dixcartuk.com or to your usual Dixcart contact.

CAN ANYONE INVEST IN UK REAL ESTATE EVEN WITHOUT A UK PASSPORT?

Yes.  Foreign individuals (over the age of 18) and corporate entities (subject to being registered at Companies House) may purchase or invest in UK real estate. 

WHAT TYPES OF INVESTMENT CAN BE MADE?

There are many ways to invest in UK real estate. Some of the more conventional routes in England and Wales include:

• Ownership of a legal “estate” in land to realise capital appreciation

An estate is an abstract entity carried on from medieval times and used to describe nothing more than time in the land.  The most common forms of estate ownership are freehold (owning land in perpetuity or “forever”) and leasehold (owning land for a number of years). Generally a term of years in a lease of property will be born out of a freehold estate or a leasehold estate for a term longer than the one in question. The owner of a term of years in a leasehold interest will be a tenant.

• Buy to let investments

A purchaser can acquire a freehold or leasehold interest (as above) specifically to rent it out to reap the rewards of a rental income. An investor will be looking closely for high net yields when deciding what to invest in and where.

• Real Estate Investment Trust (or REIT)

Providing an easier and lower cost way to invest in  property, a UK REIT (often holding a portfolio of property) provides a way to invest in buy-to-let property without having to buy property directly.  UK REITs benefit from an exemption from UK tax on both rental income and gains relating to their property investment business allowing them to redistribute up to 90% of rental income to their shareholders.

• Property development

This can take many forms. You might wish to buy land and sell it onto a developer having secured planning permission over it; buy an existing commercial building and apply for planning to convert it into residential property, convert adjoining houses into one large property and letting it out as a house with multiple occupation and so on. 

YOU HAVE IDENTIFIED A PROPERTY, WHAT NEXT?

Let the buyer beware

In the UK, a seller of  land has limited duties of disclosure to a purchaser because of the principle of caveat emptor (let the buyer beware).  In effect, a purchaser buys at its own risk. It is therefore important to instruct a property solicitor to carry out the usual pre-contract investigations on “title”, apply for the relevant searches and raise relevant enquiries of the seller. Careful investigation should minimise risk whilst flushing out any potential burdens and obligations that decrease value.

Site inspection

It is also advisable to carry out a site inspection and note any discrepancies between the plans and what is on the ground. You will also want to check for signs of the presence of occupiers,  rights of way and/or to carry out investigations such as soil samples in the event you intend to develop the land. Your professional advisor will be able to advise you further.

Who will hold “title” to the property?

This might be a corporate entity or an individual. Whenever land is held by two or more people concurrently there must be a trust. The legal title to the estate may be held by up to four persons as “joint tenants” on trust for the beneficial owners so that if any one of the legal owners dies, title to the estate passes to the survivor(s). Holding property as “tenants in common” however allows you to hold the legal interest on trust for the separate beneficiaries in equal or unequal shares as the case may be.

Finance

How will you finance the purchase and a potential deposit? Mortgages are difficult to come by in the UK for foreign investors.

Use of the property

Consider whether there are any restrictions on the use of the property.

Relocation to the UK

If you are intending on relocating to the UK, have you consulted with an immigration specialist to ensure all rules are complied with?

Tax considerations

It is advisable to speak to a professional as to the tax implications  of your impending purchase or look for tax efficient structures .

Further information

If you have any questions and/or would like advice on any Commercial Property, please contact us at: hello@dixcartuk.com or to your usual Dixcart contact.

Can foreigners buy property in the UK?

Yes. There is nothing stopping a non-UK resident individual or corporate body buying property in the UK (although an individual will need to be aged 18 years or above to own legal title to property and an overseas corporate entity must before acquiring a qualifying property firstly be registered at Companies House in compliance with the Economic Crime (Transparency and Enforcement) Act 2022).

Other than the above, different laws apply in Scotland and Northern Ireland as opposed to property in England and Wales.  We will focus below on property located in England and Wales. If you intend to purchase property in Scotland or Northern Ireland, please seek independent advice from a specialist in those areas.

The below guidance is focused on property located in England and Wales.

How do you begin your property search?

There are a number of online property search engines. Traditionally agencies either specialise in commercial or residential property but not both.  Start with a search engine to compare properties in your chosen city or other location and get in touch with the local agent advertising the property to arrange a viewing. Negotiating price below the price advertised is common.

Why is it important to view a property?

Once you find a property it is important to see it, carry out the usual pre-contract searches against it (a property solicitor or registered conveyancer will be able to assist you) or ask a surveyor to view it.  

The principle of caveat emptor (“let the buyer beware”) applies at common law. A buyer alone is responsible for checking a property. To purchase without carrying out a viewing or survey will in most cases be at the entire risk of the buyer. Sellers will normally not provide warranties or indemnities as to the suitability of the property. 

How do you finance the purchase?

The estate agent and any professionals involved in the sale will be interested to know how you intend on financing the purchase. This could be with cash, but the majority of property purchased in England and Wales is through a mortgage/property loan. There are no restrictions on foreigners securing a UK mortgage to help finance a purchase although you might encounter stricter requirements, the obligation to pay a larger deposit and higher interest rates.

What type of legal “estate” to the property are you intending on buying?

Generally, property is either sold with freehold title (you possess it absolutely) or leasehold title (borne out of freehold property which you possess for a number of years) – both are estates in land. A number of other legal interests and beneficial interests also exist but these are not covered here.

His Majesty’s Land Registry holds a register of all legal titles. If your offer price is accepted your legal advisor will review the relevant register of legal title for that property to see if the property you are buying is being sold subject to any incumbrances. Pre-contract enquiries will also normally be raised with the seller to ensure there are no over-riding third party interests in the property that may not have been obvious from your site visit.

If more than one purchaser wants to own the property, how will that property be held?

The legal title to property can be held by up to four legal owners. 

There may be tax advantages or disadvantages to how you decide to hold property as legal owner and whether that is by individuals or corporate entities or a combination of both. It is important to take independent tax advice at an early stage. 

Where the property is intended to be held by co-owners, consider whether the legal title should be held by the co-owners as “joint tenants” (the beneficial ownership of each pass on death to the other co-owners) or as “tenants in common” (the beneficial share owned, passes on death to their estate or dealt with under their will).

What happens next?

You have found a property and your offer price has been accepted and you have decided who will hold the legal title to the property. What happens next?

You will need to instruct a solicitor or conveyancer to carry out the relevant due diligence, raise enquiries, carry out the usual pre-contract searches and advise you on potential tax liability. You will need to pass the usual “know your client” due diligence before the legal work gets underway so be prepared to locate the relevant documents needed for the usual money laundering and other checks.

When purchasing a freehold or leasehold subject to a premium, a contract is usually drafted and negotiated between the parties. Once it is agreed, the contract is “exchanged” at which point a deposit is paid to the seller’s solicitor (usually around 5 to 10% of the purchase price). Once a contract is exchanged both parties are bound to perform the contract (sell and buy) pursuant to the terms of the contract.  “Completion” of the transaction happens on a date set out in the contract and is typically a month later but can be sooner or much later, depending on whether the contract is subject to conditions being satisfied.

Upon completion of the transfer of freehold or long leasehold property, the balance of the purchase price will become payable. For new short leases of both commercial and residential properties, once the new lease is dated, the matter has completed and the landlord will send the new tenant an invoice for rent, service charges and insurance as per the terms of the lease.

The buyers’/tenants’ solicitor will need to make an application to His Majesty’s Land Registry to register the transfer/new lease. The legal title will not pass until the registration is complete. 

What taxes need to be considered when taking a leasehold title or a freehold title?

The tax treatment from owning a freehold or leasehold in the UK will largely be dependent on why the individual or corporate entity holds the property.  A purchaser may buy or lease a property to reside in, occupy premises to conduct their own trade from, own to develop in order to realise a rental income or buy as an investment to develop and sell on for a profit.  Different taxes apply at each stage so it is important to speak with a tax specialist early on, depending on what plans you have for the property. 

One tax that is payable within 14 days of completion of a lease or property transfer in England  (unless one of the limited reliefs or an exemption applies) is stamp duty land tax (“SDLT”).

For residential properties see the following rates below. However, a surcharge of an additional 3% is payable on top if the purchaser already owns property elsewhere:

Property or lease premium or transfer value	SDLT rate
Up to £250,000	Zero
The next £675,000 (the portion from £250,001 to £925,000)	5%
The next £575,000 (the portion from £925,001 to £1.5 million)	10%
The remaining amount (the portion above £1.5 million)	12%

When buying a new leasehold property, any premium will be subject to tax under the above. However, if the total rent over the life of the lease (known as the ‘net present value’) is more than the SDLT threshold (currently £250,000), you’ll pay SDLT at 1% on the portion over £250,000. This does not apply to existing (‘assigned’) leases.

If you’re not present in the UK for at least 183 days (6 months) during the 12 months before your purchase, you are ‘not a UK resident’ for the purposes of SDLT. You will usually pay a 2% surcharge if you’re buying a residential property in England or Northern Ireland. For more information on this, please read our article: Overseas buyers thinking of purchasing a residential property in England or Northern Ireland in 2021?

On commercial property or mixed-use property, you will pay SDLT on increasing portions of the property price when you pay £150,000 or more. For a freehold transfer of commercial land, you will pay SDLT at the following rates:

Property or lease premium or transfer value	SDLT rate
Up to £150,000	Zero
The next £100,000 (the portion from £150,001 to £250,000)	2%
The remaining amount (the portion above £250,000)	5%

When you buy a new non-residential or mixed use leasehold property you pay SDLT on both the purchase price of the lease and purchase price of the lease and the value of the annual rent you pay (the ‘net present value’). These are calculated separately then added together. The above referred to surcharges also apply.

Your tax professional or lawyer will be able to calculate your SDLT liability according to the rates that apply at the time of your purchase or lease.

Other useful links:

• https://www.gov.uk/government/publications/how-to-buy-a-home/how-to-buy
• https://www.gov.uk/government/publications/how-to-lease/how-to-lease
• https://www.gov.uk/stamp-duty-land-tax/residential-property-rates
• https://www.dixcartuk.com/five-years-have-passed-since-the-uk-government-set-out-its-intention-to-create-a-public-register-of-the-beneficial-ownership-of-overseas-entities-uk-assets-progress/
• https://www.dixcartuk.com/register-of-overseas-entities-a-comprehensive-guide-to-the-new-registration-requirements-for-overseas-owners-of-uk-property/
• https://www.dixcartuk.com/pre-arrival-uk-tax-planning-for-non-uk-domiciled-individuals/

For more information please contact us at: hello@dixcartuk.com.

Background

According to HM Land Registry data in 2022 around 250,000 homes in England and Wales were owned by overseas nationals with another 92, 640 properties being owned by overseas entities – valued in the region of well over £97 billion.

Property is not immune from the estimated £100 billion of criminal proceeds channelled through the UK.  Transparency International UK’s research previously identified more than £6.7 billion worth of UK property bought with “suspect” wealth. 

What has compulsory registration revealed so far?

We are about two months past the deadline of the 31 January 2023 imposed by the Economic Crime (Transparency and Enforcement) Act 2022 (the “ECTAE 2022”), so there will be more to follow, but the UK Government has started to see some results. Billionaires, business figures, Conservative donors and Gulf Royals are amongst those identified as overseas beneficial owners of UK property.

Research from Transparency International UK suggests that almost 52,000 UK properties are still owned anonymously despite the requirements of ECTAE 2022. It is thought that the owners have either; ignored the law altogether, do not know about the new legal requirements, exploited loop holes or submitted information which makes it impossible for the public to find out who ultimately owns them.

Organisations are already calling on the Government and Companies House to put in further measures and close any loop-holes if the aims of ECTAE 2022 are to be realised.

What happens if you missed the deadline? 

Companies House made no announcement to extend the registration deadline beyond 31 January 2023.

Failure to register has been recognised as a possibility by the Chief Registrar of HM Land Registry. The ECTAE Act 2022 placed a duty on HM Land Registry to enter a restriction in the register of a qualifying property, if the registrar is satisfied that an overseas entity is registered as proprietor of the estate and became registered as the proprietor in pursuance of an application made on or after 1 January 1999, even if it failed to register with Companies House. The effect of this  restriction is to prohibit the registration of any sale or disposal of the relevant property.

Whilst penalties and possible prison sentences for non-compliance are very much a threat, Companies House is prepared to take into consideration evidence of genuine attempts to comply with the registration obligation, such as appointing a UK regulated agent to verify and submit an application. 

Companies House goes a step further on its website by providing tips to overseas owners on how best to ensure an application is submitted correctly. 3 out of 10 filings were rejected, often because the information provided by the overseas entity (making the application directly) did not match the information provided by the agent.

Why is it important to comply if you have not already done so?

Until registered, an overseas entity is technically breaking the law and that comes with consequences as mentioned above. In addition, an overseas entity has a duty to ensure that the information they have submitted to the registrar remains accurate at all times. Any changes will need to be reported, at least annually. Failure to comply will result in penalties.

Overseas owners unable to properly dispose of their legal titles in property, may be tempted to dispose in other ways. Would be purchasers and new tenants should be cautious. Transferring a deposit, completion monies or receiving a reverse premium from or to a non-compliant overseas landlord may constitute proceeds of crime under the Proceeds of Crime Act 2002. Failure to check whether an overseas seller or landlord has registered with Companies House could inadvertently jeopardise a buyer or tenant for money laundering purposes.  Time will tell whether the Courts consider that a crime has been committed or a mere regulatory breach has taken place.

For more detail please see:

Register of Overseas Entities – GOV.UK (www.gov.uk)

Updated guidance from UK Gov_register-an-overseas-entity

HM Land Registry practice-guide-78-overseas-companies-and-limited-liability-partnerships

https://www.transparency.org.uk/uk-register-overseas-entities-through-the-keyhole

Additional Information

If you have any questions or think you may need to register your overseas entity, please get in touch with Ben Habershon at: hello@dixcartuk.com.

The deadline of 31 January 2023, for the registration of overseas entities with property interests in the UK, with Companies House has now past. An estimated 13,000 relevant overseas entities had not registered by the deadline, approximately 40% of the total. 

Considerable work needs to be committed to the verification process, before an application for registration can be made.  

In addition, overseas entities that owned a qualifying estate on February 28, 2022 and have subsequently disposed of their interest, are also caught by the rules.

Following the introduction of the  Economic Crime (Transparency and Enforcement) 2022 Act (“ECTE ACT”) which came into force on 01 August 2022 the UK Government is now seeking further measures with the introduction of the Economic Crime and Corporate Transparency Bill which is already past Committee stage in the House of Commons.  The register of overseas entities will be amended to maintain consistency with changes intended to the Companies Act 2006. Amongst the other far reaching and significant changes intended by the Bill are:

• reforms to Companies House including the introduction of identity verification for all new and existing registered company directors
• reforms to prevent the abuse of limited partnerships by tightening registration requirements and increasing transparency
• additional powers to seize and recover suspected criminal cryptoassets by boosting criminal confiscation powers
• reforms to give businesses more confidence to share information in order to tackle money laundering and other economic crime
• new intelligence gathering powers for law enforcement and removal of nugatory burdens on business.

If you have any questions or think you may need to register your overseas entity, please get in touch with Ben Habershon at: hello@dixcartuk.com.

For further information please see our previous article here

See also: https://companieshouse.blog.gov.uk/2022 and https://bills.parliament.uk/bills/3339

Register of Overseas Entities – Time to take action now

Since the introduction of the Economic Crime (Transparency and Enforcement) Act 2022 earlier this year, we have been waiting for signs of when the new Register of Overseas Entities would be introduced.

The government have announced that the new register of overseas entities (ROE) will come into force at 9am on 01 August 2022.

As criminal offences may be committed for non-compliance with the requirement for overseas entities to register certain details (including those of the beneficial owners) to Companies House, it is time to take action now. 

Below we explain what has changed, who you need to identify, what information is required to enable you to register and how we can help you.

What has changed since the enactment of the Economic Crime (Transparency and Enforcement) Act 2022?

The three new statutory instruments have been introduced:

1. The Register of Overseas Entities (VPI) Regs 2022
2. The Land Registration (Amendment) Rules 2022
3. The Register of Overseas Entities (Delivery, Protection and Trust Services) Regulations 2022

In essence, an overseas entity will need to gather evidence and information required under the 2022 Act and forward this to an independent verification officer in the UK. The verification officer will then submit an application to Companies House to add the relevant entity to the register which will generate a unique Overseas Entity ID code.

Who needs to register?

The beneficial owner of any overseas entity (being a corporate body, partnership or other legal person) governed by the laws of a country or territory outside of the United Kingdom that owns, leases or disposes of qualifying real estate.

For the purposes of the Economic Crime (Transparency and Enforcement) Act 2022 a beneficial owner could be:  

Individual	Legal Entity Body Corporate	Government/Public body and others
A person (“X”) is a “beneficial owner” of an overseas entity or other legal entity (“Y”) if one or more of the following conditions are met (within Part 2 Sch 2):	In addition to items 1 to 4 in the last column, a legal entity is a registerable beneficial owner if it is subject to its own disclosure requirements.  Part 3 Sch 2 lists these as:	A government or public authority is a “registrable beneficial owner” in relation to an overseas entity in all cases where it is a beneficial owner of the entity and:
1. X holds, directly or indirectly, more than 25% of the voting rights in Y 2. X holds the right, directly or indirectly, to appoint or remove a majority of the board of directors of Y 3. X has the right to exercise, or actually exercises, significant influence or control over Y 4. Trusts: (a) the trustees of a trust, or the members of a partnership, unincorporated association or other entity, that is not a legal person under the law by which it is governed meet any of the conditions specified above (in their capacity as such) in relation to Y, and (b) X has the right to exercise, or actually exercises, significant influence or control over the activities of that trust or entity.	a) Part 21A of the Companies Act 2006 applies to it (whether by virtue of section 790B of that Act or another enactment that extends the application of that Part), b) it is a company to which section 790C(7)(b) of that Act applies (companies with voting shares traded on UK or EU regulated markets), c) it is of a description specified in regulations under section 790B(1)(b) or 790C(7)(d) of that Act (or under either of those sections as extended), d) it is an eligible Scottish partnership within the meaning of regulation 3 of the Scottish Partnerships (Register of People with Significant Control) Regulations 2017 (S.I. 2017/694), e) it is registered in the register of overseas entities under this Part of this Act, or f) it is of a description specified by the Secretary of State in regulations under this paragraph	Is a beneficial owner within Part 2 Sch 2 (see the first column). Trusts In respect of any registerable beneficial owner who is a trustee information will need to be provided about the trust itself.
Is not exempt from registration pursuant to Part 4 of Sch 2 deals with a limited number of exemptions.	Is not exempt from registration: See first column.
	(Part 5 of Sch 2 provides further supplementary provisions for the interpretation of Schedule 2).

What are the timelines from when the register goes live?

• Overseas entities who already own qualifying property in the UK (excluding Northern Ireland where different rules apply) acquired at any time on or after 1 January 1999 will have 6 months from the date the register becomes live to register with Companies House.  
• Overseas entities acquiring freehold property or a lease granted for 7 years or more in the UK will be required to register with Companies House as soon as the register becomes live.
• Overseas entities that have disposed of qualifying property (by sale of a freehold or the grant or assignment of a lease with 7 or more years in term or the grant of a legal charge) between 28 February 2022 and 6 months from the date the register goes live.

What information is required before registration can take place at Companies House?

Schedule 1 of the Economic Crime (Transparency and Enforcement) Act 2022 sets out the required information needed in order to register the beneficial interest at Companies House as per the below table:

Individual (being those who meet the thresholds for control or ownership as above)	Legal Entity body corporate	Government/Public body and others
(a) Name, date of birth and nationality; (b) usual residential address; (c) a service address; (d )the date on which the individual became a registrable beneficial owner in relation to the overseas entity; (e) which of the conditions in paragraph 6 of Schedule 2 is met in relation to the registrable beneficial owner (see the table above) (f) whether the individual meets that condition by virtue of being a trustee; (g) whether the individual is a designated person (persons so named by Ministers or under UN Security Council Resolutions within the meaning of section 9(2) of the Sanctions and Anti-Money Laundering Act 2018), where that information is publicly available.	(a) Name; (b) country of incorporation or formation; (c) registered or principal office; (d) a service address; (e) an email address; (f) the legal form of the entity and the law by which it is governed; (g) any public register in which it is entered and, if applicable, its registration number in that register (in the country in which the overseas entity was incorporated or formed). And also: (h) the date on which the entity became a registrable beneficial owner in relation to the overseas entity; (i) which of the conditions in paragraph 6 of Schedule 2 is met in relation to the registrable beneficial owner and a statement as to why that condition is met; (j) whether the entity meets that condition by virtue of being a trustee; and (k) whether the entity is a designated person (persons so named by Ministers or under UN Security Council Resolutions within the meaning of section 9(2) of the Sanctions and Anti-Money Laundering Act 2018), where that information is publicly available.	(a) Name; (b) principal office; (c) a service address; (d) its legal form and the law by which it is governed; (e) the date on which the entity became a registrable beneficial owner in relation to the overseas entity; (f) which of the conditions in paragraph 6 of Schedule 2 is met in relation to the registrable beneficial owner and a statement as to why that condition is met; and (g) whether the entity is a designated person (within the meaning of section 9(2) of the Sanctions and Anti-Money Laundering Act 2018), where that information is publicly available.   Trusts (a) The name of the trust or, if it does not have a name, a description by which it may be identified; (b) the date on which the trust was created; (c) in relation to each person who has at any time been a registrable beneficial owner in relation to the overseas entity by virtue of being a trustee of the trust— (i) the person’s name, (ii) the date on which the person became a registrable beneficial owner in that capacity, and (iii) if relevant, the date on which the person ceased to be a registrable beneficial owner in that capacity; (d) in relation to each beneficiary under the trust, the information that would be required for individuals or other legal entities if the beneficiary were a registrable beneficial owner in relation to the overseas entity; (e) in relation to each settlor or grantor, the information that would be required for individuals or other legal entities if the settlor or grantor were a registrable beneficial owner in relation to the overseas entity; (f) in relation to any person who, under the terms of the trust, has rights in respect of (a) the appointment or removal of trustees, or (b) the exercise by the trustees of their functions: (i) the information that would be required for individuals or other legal entities if the interested person were a registrable beneficial owner in relation to the overseas entity, and (ii) the date on which the person became an interested person.
Dispositions (within the meaning given in section 41 (4) of the 2022 Act) between 28 February 2022 and 6 months after the register becomes live?  In addition to the above Section 41 of the 2022 Act  must be complied which includes the delivery of the following information: a) the date of disposition, and b) the registered title number of the qualifying estate; c) the date of delivery of the deed, d) the title number of the title sheet in which the entity’s interest is entered.	Dispositions (within the meaning given in section 41 (4) of the 2022 Act) between 28 February 2022 and 6 months after the register becomes live?    The same information as with individuals is required here.	Dispositions (within the meaning given in section 41 (4) of the 2022 Act) between 28 February 2022 and 6 months after the register becomes live?  The same information as with individuals is required here.

An overseas entity may give an information notice to any person that it knows, or has reasonable cause to believe, is a registrable beneficial owner in relation to the entity.

The notice will require the person to whom it is given to state whether or not they are a registerable beneficial owner (and then provide the information above). The overseas entity may also give a person an information notice if it knows or has reasonable cause to believe that the person knows the identity of a person who is a registrable beneficial owner in relation to the overseas entity, any other beneficial owner in relation to the overseas entity, a person likely to have knowledge of the identity of a person falling into either of the first two categories.

It is an offence for the person served either notice not to; respond or to give false or make reckless statements. The person, subject to a summary conviction may face subsequent imprisonment.

The Secretary of State also has powers to require an overseas entity to apply for registration within a period of 6 months of the date of the notice. Again, sanctions apply for non-compliance.

In addition to the above, the overseas entity must also deliver one of the following three statements regarding its registerable beneficial owner and provide the relevant evidence to back up the statement as follows:

	Statement	Further Information Required
1	(a) That the entity has identified one or more registrable beneficial owners and that it has no reasonable cause to believe there are others and (b) that the entity is able to provide the required information about each registrable beneficial owner it has identified.	1. The required information about the entity (see above table).   2. The required information about each registrable beneficial owner that the entity has identified.
2	A statement that the entity has no reasonable cause to believe that it has any registrable beneficial owners.	1. The required information about the entity (as above).   2. The required information about each managing officer (see below) of the entity.
3	(a) That the entity has reasonable cause to believe that there is at least one registrable beneficial owner that it has not identified, (b) that the entity is not able to provide the required information about one or more of the registrable beneficial owners it has identified, or (c) that paragraphs (a) and (b) both apply.	1. The required information about the entity (as above).   2. The required information about each managing officer (see below) of the entity.   3. The required information about each registrable beneficial owner that the entity has identified or so much of that information as it has been able to obtain.
	Trusts: Where an entity discloses that a registrable beneficial owner is a trustee then the application must also include:	(a) The required information about the trust or so much of that information as the overseas entity has been able to obtain, and (b) a statement as to whether the entity has any reasonable cause to believe that there is required information about the trust that it has not been able to obtain; and (c) trust beneficiaries also need to be disclosed, together with their names, dates of birth, nationality, residential address and service address (if a legal entity other than an individual).

If either statement 2 or 3 above applies, then further information is required as to the “managing officer” (a director, manager, secretary). Part 4 of Sch 1 of the 2022 Act requires the additional following information to be provided in relation to the managing officer:

Individuals

Non-individuals (including public bodies)

(a) Name, date of birth and nationality; (b) any former name (unless changed aged 16 or below or greater than 20 years ago); (c) usual residential address; (d) a service address (which may be stated as the entity’s registered or principal office); (e) business occupation (if any); and (f) a description of the officer’s roles and responsibilities in relation to the entity.

(a) Name; (b) registered or principal office; (c) a service address; (d) the legal form of the entity and the law by which it is governed; (e) any public register in which it is entered and, if applicable, its registration number in that register; (f) a description of the officer’s roles and responsibilities in relation to the entity; and (g) the name and contact details of an individual who may be contacted about the managing officer.

Who submits the information and how?

The register will be a digital service with information to be submitted in English.

Before any application for first registration or later updating applications/rectifications and amendments can take place, the information above will be subject to formal verification by a relevant person (being one falling within section 3 and 8 of The Money Laundering Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017). Broadly, a relevant person will include an independent legal professional, financial institutions, auditors, estate agents, auction platforms etc. 

Once the information has been verified the relevant person will need to confirm to the  Companies House Registrar that it has completed verification in accordance with the new Act and regulations and provide a  statement complying with Part 2 (5) of The Register of Overseas Entities (VPI) Regulations 2022.  If the relevant entity has made no relevant dispositions between 28 February 2022 and the date the application is made, the application must state this.

The information itself is to be retained by the relevant person for a period of 5 years.

What happens once registration is accepted?

Companies House will then publish the identity on a public register and assign a unique Overseas Entity ID. The name of the relevant entity and their agent will be available to the public on the Companies House website. The Overseas Entity ID will be required by the Land Registry before it registers any dealings with real estate in England & Wales.

The 2022 Act requires registered entities to update their information annually.

Secondary legislation allows individuals to be able to protect some of their information from public disclosure in limited circumstances (if it can be shown an individual or the people they reside with will be at serious risk of violence or intimidation).

Failure to comply with registration and/or within the time limits imposed?

In England and Wales a person guilty of an offence is liable on summary conviction to a daily fine of up to £2,500 or unlimited fines and a prison sentence of up to 5 years. Failure to register will also prevent any dealings with the real estate in question.

What can we do to help you?

We appreciate the above information is a bit of a mine-field especially as we are expecting further amendments to the legislation in the next few weeks.

We can keep you up to date of the latest developments, assist and advise you on your obligations and aid in collecting the required information. If you require, we can also verify the required information for you and make the application for registration to Companies House and communicate the unique Overseas Entity ID number to you as well as process annual returns.

Additional information

If you have any questions and/or would like advice on the UK public register of beneficial ownership of overseas entities, please contact us at: hello@dixcartuk.com.