How do I register an overseas entity in the UK? This will walk you through it. Registering overseas entities is a mandatory process to ensure property ownership transparency and combat economic crime. In this article you will learn the requirements for registering overseas entities, the process and the consequences of not registering overseas entities.

Key Points

• The Register of Overseas Entities launched in August 2022 requires overseas entities to disclose beneficial owners before buying UK land to increase transparency and combat economic crime.
• Overseas entities must go through a full registration process, including verification by a UK regulated agent and get an Overseas Entity ID which is required for property transactions in the UK.
• Registered entities must file annual updates to stay up to date, non-compliance will result in hefty penalties, including restrictions on property transactions and criminal charges.

What is the Register of Overseas Entities

The main purpose of the Register of Overseas Entities is to combat global economic crime. This was accelerated by the Russian invasion of Ukraine, the need for property ownership transparency was highlighted. Launched on 1 August 2022 the register requires overseas entities to disclose their beneficial owners before buying land in the UK.

Transparency is key. Public disclosure of ownership details will deter illegal activity and a fairer property market. The register has been viewed over 500,000 times already, it’s clear it’s important and the public want property ownership transparency.

Entities that register get an Overseas Entity ID which is required for any property transactions involving UK land. This ID will only allow compliant entities to do property transactions, further securing the market against economic crime.

What is an Overseas Entity

An overseas entity is a legal structure, such as a company, that operates under the jurisdiction of a country or territory other than the UK. This includes a wide range of legal entities, corporations, partnerships and other legal structures that are recognised as a legal entity under their governing law.

Tax residence does not affect the registration requirement for overseas entities. Whether an entity is tax resident in the UK or elsewhere, if it’s under the jurisdiction of a non-UK country it must register in the UK before buying property.

Registrable Beneficial Owners (RBOs)

Registrable Beneficial Owners (RBOs) are individuals who own or control an overseas entity. To be a RBO an individual must not be exempt and must meet specific ownership or control thresholds. This includes holding more than 25% of the company’s shares or voting rights or control through other means.

In cases where beneficial ownership is indirect, such as through a subsidiary, the ultimate beneficial owner is the natural person who controls the parent entity. If an overseas entity cannot identify a beneficial owner despite reasonable efforts it must record its senior managing officers as the beneficial owners.

RBO information must be accurate for compliance. This register will help track and prevent illegal activity and hold to account those who control or benefit from the entity.

The Registration Process

The process starts with an application to Companies House before buying UK land or property. This is to comply with the Economic Crime (Transparency and Enforcement) Act 2022. Overseas entities must prepare all the necessary documents and provide detailed information about their beneficial owners and managing officers.

Verification is part of the process. A UK regulated agent must verify the information provided by the overseas entity to ensure it’s accurate. This verification will keep the register clean and prevent fraudulent information from being recorded.

Each application is £100. Upon registration entities will get an Overseas Entity ID which is required for any UK property transactions in the UK.

Required Information

Entities must provide specific information about their beneficial owners including full name, date of birth and nationality. They must also define the nature of control held by these owners during registration. This detailed information will ensure the register reflects the ownership and control structure of the overseas entity.

If beneficial owners are not identified overseas entities must disclose information about their managing officers. Getting an Overseas Entity ID is also required to register as a proprietor of a qualifying estate.

Annual Updating Duty

Registered overseas entities must file annual update statements to confirm their information is up to date. This must be done at least once a year and 14 days after the registration anniversary. Even if there are no changes to the information entities must still file their update to keep the register current.

Failing to comply with the updating duty will render the registration void with potential penalties and restrictions. Companies House will send email reminders for filing update statements to help entities meet their annual updating duty.

Keeping information accurate and up to date is important not only for compliance but also for transparency and trust in the property market.

Consequences of Non-Compliance

Failing to comply with the registration requirements can result in severe penalties including restrictions on property transactions. Civil financial penalties can be imposed on overseas entities that fail to comply. The registrar can also start criminal proceedings against entities that persistently breach the registration requirements.

Non compliance can result in daily fines for ongoing breaches and serious breaches will be referred to law enforcement agencies. Restrictions on property transactions include being unable to sell or lease land which will severely impact the entity’s operations in the UK.

Entities can appeal penalties imposed on the Register of Overseas Entities to higher courts if they believe the sanctions are unfair.

Special Cases: Exempt Overseas Entities

Exempt overseas entities are not generally required to register in the same way as other entities. However the regulations defining exempt overseas entities have not been published yet so there is a gap in guidance. This means some overseas entities may not have to register until specific regulations are published.

There is no criteria for an exempt overseas entity yet. No guidance is available on this. Entities that think they may be exempt should keep an eye on future regulatory updates to stay compliant.

Public Access to the Register

The Register of Overseas Entities improves land registry transparency through specific disclosures. Most of this information is available on Companies House but some is withheld to protect individual privacy.

Sensitive information like residential addresses and dates of birth are withheld from public access to protect personal privacy. Individuals can apply to have their information restricted from public access if disclosure would put them in serious danger.

The Secretary of State will regulate to ensure public access to trust information without putting personal safety at risk.

Enforcement and Penalties

Failing to comply with the updating duty and other registration requirements can result in serious legal consequences. Failing to update the register is a criminal offence. It can also result in financial penalties and imprisonment. Both the entity and its officers can face these penalties so compliance is key.

Enforcement measures include restrictions on property transactions and referral to law enforcement agencies for serious breaches. These penalties show the government’s determination to tackle economic crime and transparency in the property market.

Top Tips for Compliance

Complying with the Register of Overseas Entities requires effort and attention to detail. Companies House will send reminders to help entities meet their annual filing requirements. You need to take reasonable steps to gather and verify information about beneficial owners and managing officers.

Using UK regulated agents for verification checks and keeping records will make the registration process and ongoing compliance easier. Keeping up to date with regulatory updates and seeking professional advice when needed will help you stay compliant.

Conclusion

In short the Register of Overseas Entities is a key tool to promote transparency and tackle economic crime in the UK property market. By understanding the registration process, what is an overseas entity, who are the registrable beneficial owners and staying compliant with annual updates entities can avoid severe penalties and have a fairer market.

Having accurate and up to date information fulfills your legal obligations but also builds trust and integrity in property transactions. Stay informed, stay compliant and help create a transparent property market.

Frequently Asked Questions

What is the primary aim of the Register of Overseas Entities?

The primary aim of the Register of Overseas Entities is to combat global economic crime by enhancing transparency in property ownership. This initiative seeks to deter illicit activities related to real estate investments.

What qualifies as an overseas entity?

An overseas entity is defined as a legal structure, such as a company, that operates under the jurisdiction of a country or territory outside of the UK.

What are the consequences of non-compliance with the registration requirements?

Non-compliance with registration requirements can lead to significant financial penalties, restrictions on property transactions, and potential criminal proceedings. It is crucial to adhere to these requirements to avoid such serious consequences.

Are there any exemptions for certain overseas entities?

Currently, there are no defined exemptions for overseas entities, but regulations regarding this matter are anticipated in the future.

How can I ensure compliance with the Register of Overseas Entities?

To ensure compliance with the Register of Overseas Entities, it is essential to stay informed about regulatory updates, engage with UK-regulated agents for verification checks, and file annual updates as mandated. Taking these proactive steps will help you maintain adherence to the regulations.