On 23 July 2018, the Department for Business, Energy and Industrial Strategy (BEIS) published in draft the ‘Registration of Overseas Entities Bill’, setting out provisions to establish a new beneficial ownership register of overseas entities that own UK property. The Government’s objective is to combat money laundering through the acquisition of UK property by increasing transparency and imposing criminal penalties for non-compliance.
Overseas entities that own UK property will be required to register (and regularly update) their beneficial ownership information before they can undertake certain transactions with that property, such as selling or leasing the land, or creating a legal charge over the land, such as a mortgage. The new overseas public registration regime will be be similar to the existing persons with significant control (PSC) regime which currently only applies to UK entities.
An overseas entity is defined as a company, partnership or other entity which is governed by the law of a country outside of the UK, which has the status of a legal person under the laws of that country so can own property in its own right. Trusts are excluded from this definition since they do not have legal status.
The draft bill is open for consultation until 17 September 2018. As announced in January 2018, the Government intends the register to become operational in 2021. Click the following link for the full version of the draft legislation: https://www.gov.uk/government/consultations/draft-registration-of-overseas-entities-bill
We will continue to keep you updated as this draft legislation develops but, in the meantime, this increased level of transparency may be a reason to review property structures. Please contact Moore to discuss any of the above the matters in more detail.