New Register of Beneficial Ownership for Offshore Companies owning UK property
The Government has published draft legislation called the Registration of Overseas Entitles Bill which will require overseas entities such as offshore companies who own UK property to register details of their beneficial ownership at Companies House.
The sanctions for failing to provide the details of beneficial ownership will be or to keep these up to date will be:
A criminal offence.
The overseas entity will not be able to be registered as the owner of land in the UK Land Registries and sales of leases and mortgages of land already owned by the overseas entity will be blocked by a restriction placed on the property by the Land Registry.
The risk of a transaction relating to the property being rendered void.
These proposals will be of significance not only to the overseas entity itself but also to anyone lending to it and buying a UK property from it or leasing the property from or to it will need to check that the registration requirements have been complied with at the date of completion.
This is part of the Government’s continuing anti money laundering strategy and on top of the various additional tax burdens placed on offshore companies attempting to dissuade people from acquiring UK land in such entities. Indeed those tax changes have already resulted in particular with regard to residential property a significant increase in the number of overseas buyers acquiring UK property in personal names where previously they may well have taken the property in the name of an offshore company.
The Government intends the register will come into effect in 2021. Overseas entities who already own UK property have 18 months to either sell that property or to register details of the beneficial ownership.
Interestingly in France offshore companies owning French land are required to pay an annual tax of 3% of the value of the property but can gain exemption from this if they provide a declaration of beneficial ownership. This is a typically pragmatic French approach but no such opportunity to ‘buy’ anonymity is proposed in the UK
Solicitor and Director
Sykes Anderson Perry Limited, Solicitors