An article from our UK member MUSCATT BLACK GRAF
Overseas entity property owners who fail to register with Companies House can now be hit with more significant financial penalties under new Regulations which came into force on 1 May 2024.
The Economic Crime and Corporate Transparency Act 2023 (Financial Penalty) Regulations 2024 give new powers to Companies House to impose higher financial penalties on overseas entities that own UK property or land but fail to declare their beneficial owners or managing officers for inclusion on the Register of Overseas Entities (ROE).
Overseas entities who want to buy, sell or transfer property or land in the UK have been required to register with Companies House since 1 August 2022 in order to complete their obligations under the Economic Crime (Transparency and Enforcement) Act 2022.
The ROE was established to increase transparency in the ownership of overseas entities that own UK land to tackle financial crime.
It was revealed at the end of last year that more than 30,000 entries had been made to the ROE since its inception, which the UK government hailed as a “milestone”.
“Reaching 30,000 registrations is a significant milestone but also a positive sign that the register is achieving its objective of enhancing transparency of ownership of land and property in the UK by foreign entities,” said Director of Intelligence and Law Enforcement Liaison at Companies House, Martin Swain.
However, the government has faced criticism for failing to enforce fines of around £1bn on overseas entities that had not declared their owners.
A lack of appropriate enforcement regulations meant that up until the start of May Companies House was only able to impose a civil penalty regime for non-compliance, where a company automatically incurs a penalty for failing to file its accounts on time.
The new Regulations will enable the Registrar to impose a financial penalty directly, as an alternative to pursuing criminal prosecution through the courts.
Penalties include fines of up to £2,500 a day, restrictions on the property, and the possibility of imprisonment.
In order to exercise its new powers, Companies House will need to be satisfied beyond reasonable doubt that an offence has been committed. It is expected that Companies House will publish guidance on its enforcement approach before it starts issuing financial penalties.
The introduction of the Financial Penalty Regulations is the latest move by the government in its bid to tackle global economic crime.
Previously, organised crime has used corporate structures such as overseas entities to invest in UK land and has been able to remain anonymous and largely invisible.
The government believes that identifying those who own and control such entities will help law enforcement agencies by providing more information than has previously been available.
LAWYERS FOR OVERSEAS PROPERTY OWNERS LONDON
At Muscatt Black Graf, our Property Law department includes advice on commercial and residential property matters and our Real Estate lawyers have the depth and breadth of knowledge to provide you with the pragmatic advice you need.
Our experienced lawyers advise on many different areas of Real Estate law including sale and purchase of freehold and leasehold residential property, developments, financing, enfranchisement, and agricultural property.
Alex Finney acts for high-net-worth individuals and families in respect of their UK property interests. She advises on matters involving properties in prime London and high value transactions elsewhere in England and Wales.
Paul McKee has over 20 years of experience acting for a wide range of individuals and corporate clients on commercial and residential property matters.
We have a dedicated Property Finance legal division, headed up by partner Rommel Guevarra, who acts for national and regional clients across many different industries ranging from private individuals, portfolio investors, developers, companies, banks and trustees.
The Property team works closely with our Company and Commercial practice, headed by partner Ryan Ottman.
Due to the difference in the definition of ‘Ultimate Beneficial Owner’ used in the Anti-Money Laundering legislation and ‘Beneficial Owner’ used in Economic Crime (Transparency and Enforcement) Act 2022, as well as voluminous forms that have to be reviewed and completed, overseas entities have been facing difficulties in fulfilling their obligations – especially in cases of trusts.
We regularly advise many overseas entities regarding these issues and have successfully registered many with the Register of Overseas Entities.
Our teams’ combined expertise in Property and Corporate practice will ensure our clients benefit from high-quality, practical legal advice that is tailored to meet their needs.
If you are an overseas entity with UK-based property interests or are considering investing in the UK property market from a different jurisdiction, please email Muscatt Black Graf on contact@muscattblackgraf.com. Alternatively, click here to complete our online contact form.
Concerto’s contact details:
President
- Maria J.Graca, ABREU & MARQUES
- Management
-
- Bernard Steimes, Coordinator (AVENS Brussels)
This blog was prepared on 15 May 2024. It is not intended to be advice and should not be relied upon as such.
