Author : Lee Harle
The closing date for all foreign investors owing properties in the UK to register with Companies House is fast approaching. After establishing the Register of Overseas Entities, Companies House recommends all agents and foreign entities within the scope to complete the registration process by the deadline. The cut-off date to register by providing the relevant information is January 31, 2023. Overseas entities should declare beneficial owners along with other details. They must update their data each year.
The Importance of Compliance
The Economic Crime (Transparency and Enforcement) Act 2022 came into force on August 1, 2022. It applies to foreign investors owning properties in England, Wales, Scotland, and Northern Ireland. All foreign investors, including Irish and other overseas entities, must submit the relevant information to Companies House by identifying beneficial owners before the deadline. Every overseas entity planning to own property must register with Companies House. The Act also applies to present property owners. They should ensure compliance with the Act before selling or granting a lease or security.
Registering before the cut-off date is crucial to avoid penalties and prosecution. Companies House advises agents to work with their clients and verify the information before filing for registration. Agents should submit the information on clients' behalf to expedite the process. Most rejections of filings are because of errors in the section on the agent's information. Some common flaws are:
Incorrect registry name
Abbreviation of registry names
Wrong email addresses
Inconsistency in the agent's name
A discrepancy in the responsible person's name
Variations in addresses
Avoiding such errors will minimize rejections and unnecessary hassles.
Verification of Information
Overseas entities must identify and provide all details of managing officers and/or beneficial owners. They cannot move ahead with the process independently, as the registration process requires proper authentication. Verifying the information by relevant professionals such as auditors, tax advisers, financial institutions, and insolvency practitioners is mandatory, as there was a lot of criticism about the practice of self-attestation.
The professional verifying the information must alert the National Crime Agency through a report if there is a reason for suspicion. The Suspicious Activity Report should provide information about acts of money laundering or terror funding.
There is a provision for multiple sanctions impacting entities and individuals in the event of a failure to:
Declare information about beneficial owners
Update the information in the register annually
Provide accurate information that is not deceptive, incorrect, or misleading
Respond to any request for information from the registrar
A non-UK entity that disposes of the property without registering with Companies House risks a daily fine of up to 2,500, as well as the imprisonment of its officers.
All non-UK entities holding interests in land or foreign entities undertaking M&A activity resulting in interests in UK land are required to register and comply with the Economic Crime (Transparency and Enforcement) Act 2022.
All concerned overseas entities, beneficial owners, and managing officers should study the registration requirements besides understanding how the Act impacts property investments in the UK. They must take immediate action to complete filing before the deadline. Agencies or individuals planning to provide loans to such entities must ensure that the foreign entity is taking steps to comply with the registration process.
Advisors should consider the implications of non-compliance, as entities not complying with the process cannot register qualifying estates. Risk management is essential for both parties before finalizing the transaction documents. The government's intent to keep watch over the inflow of wealth into the UK may impact other sectors like luxury goods supply and money management.
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