Introduction: New Registration Obligations for Non-UK Entities

The deadline for foreign investors owning UK properties to register with Companies House is fast approaching. The Register of Overseas Entities, established under the Economic Crime (Transparency and Enforcement) Act 2022, requires all non-UK entities to declare beneficial owners and update their information annually. The final cut-off date for registration is January 31, 2023. This blog explores the key aspects of compliance, common pitfalls, and the implications of non-compliance.

The Importance of Compliance with the Economic Crime Act 2022

The Economic Crime (Transparency and Enforcement) Act 2022, effective from August 1, 2022, applies to all foreign entities owning property in England, Wales, Scotland, and Northern Ireland. This includes Irish and other overseas entities. The Act mandates that all overseas entities, whether existing or new property owners, must register with Companies House and disclose beneficial ownership details. Compliance is essential not only for new acquisitions but also for selling, leasing, or securing properties.

Avoiding Errors in the Registration Process

To avoid penalties and prosecution, it is crucial to register before the deadline. Companies House advises agents to verify all information before submission, as errors are a common cause of rejection. Common mistakes include:

• Incorrect or abbreviated registry names

• Wrong email addresses

• Inconsistencies in agent or responsible person names

• Discrepancies in addresses
  Agents should work closely with clients to ensure accuracy and expedite the registration process.

Verification of Information: A Critical Step

Overseas entities cannot self-attest their information. Instead, the registration process requires verification by qualified professionals such as auditors, tax advisers, or financial institutions. These professionals must also report any suspicious activity, such as potential money laundering or terror funding, to the National Crime Agency via a Suspicious Activity Report (SAR). This step ensures transparency and accountability in the registration process.

Implications of Non-Compliance

Failure to comply with the Act carries significant consequences, including:

• Fines of up to £2,500 per day for entities disposing of property without registration

• Potential imprisonment of officers

• Inability to register qualifying estates

• Sanctions for providing inaccurate, misleading, or incomplete information
  Non-compliance not only risks legal penalties but also hinders property transactions and investments.

The Way Forward: Ensuring Compliance and Risk Management

All non-UK entities with interests in UK land must act swiftly to meet the registration deadline. Beneficial owners, managing officers, and advisors should thoroughly understand the Act’s requirements and its impact on property investments. Lenders and advisors must ensure that foreign entities are compliant before finalizing transactions. Additionally, the government’s focus on transparency may extend to other sectors, such as luxury goods and money management, making risk management a priority for all stakeholders.