Do you own any property in the UK that is not registered in your own name? Act fast to avoid a fine or imprisonment.

Do you own any property in the UK that is not registered in your own name? Act fast to avoid a fine or imprisonment.

Property ownership in The UK is changing. On the 1st August 2022 the new Economic Crime (Transparency and Enforcement) Act 2022 came into effect, and it brought with it a new Register of Overseas Entities (ROE).

Introduction:

The UK Government is taking steps to ensure that the UK is not being used as a safe haven for economic criminals to invest and store their illegal money. This Act is one of the most significant developments for combatting these types of crimes that we have seen. While it has been more than 5 years since the Government first announced plans to create such a register, there was little effort made to follow through until the exacerbation of the situation in Ukraine and the flurry of new Sanctions that were imposed on Russia as a result.

What it applies to:

The new register applies to freehold land and properties that were purchased or leased for a period of over 7 years. The date of purchase or start of the lease must be on or after 1 January 1999 in England and Wales, 8 December 2014 in Scotland, or on or after 1st August 2022 in Northern Ireland by an Overseas Legal Entity. This is a corporate, partnership, trust, or any other kind of entity that is owned or has a beneficial owner that is a legal person not governed by UK Law. The register will be held by Companies House. While private information such as the name and address of registered beneficial owners and the property will be withheld from the public, it can be shared by Companies House with Her Majesty’s Revenue and Customs (HMRC) – the UK government’s department in charge of assessing and collecting taxes and duties.

What is required:

This new law requires that all overseas companies and trusts that own freehold land and leases that are 7 years or over in the UK to take reasonable steps to declare the registerable owner of the property. These registerable owners should be given a notice to register by the managing officers of the property. A registerable owner is someone who owns at least 25% of the property. There will be strict consequences for entities that do not comply including restrictions on the purchase, sale, and transfer of the property, as well as blocks on registering or transferring new leases that are 7 years or longer, as well as creating new charges against the property.

Failure to register is also considered a criminal offence and the officers of the company can also be fined and prosecuted. The punishment can be a daily recurring fine of up to £2,500 per day for all parties involved. If a reasonable amount of time and daily fines has passed and still no attempt has been made to register the beneficial owner, the Secretary of State may issue a notice requirement to register to the registerable beneficial owner of the overseas entity. If they still fail to do so in a reasonable amount of time, the officers of the entity may receive a summary conviction and prison sentence of up to 12 months in England, Wales, and Scotland, or 6 months in Northern Ireland, as well as additional fines.

Conclusion:

Don’t worry! Although the Act has just come into effect, there is still time to register the required information. A grace period totaling 6 months is in place, giving overseas entities until 31st January 2023 to register the details of their beneficial owners. It is important that the registration is done properly, as a registration with incorrect details or missing information will be deemed as a non-registration and can incur the same punishment as if no attempt to register was made. Contact info@adglegal.com for assistance with registering your property to avoid all fines and convictions.

 

 

ADG Legal

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