Mark Taylor
Mark Taylor
Head of International Tax, Duncan & Toplis, Kreston Global Tax Chair

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Mark is a Duncan & Toplis’s Management Board member and head of tax advisory services, covering all of their 11 offices. Mark has particular expertise in international structuring and corporate and property taxes. Mark is head of international tax for the firm while also heading up their corporate and business tax group and property tax departments. He has extensive experience of tax planning and due diligence having worked on many large property transactions, corporate restructures, acquisitions and disposals. Mark thrives on adding value to his clients and having a great team culture. Mark was made Chair of the Global Tax group at Kreston in June 2020.

UK property-owning overseas entities face ‘severe sanctions’ under new rules

August 18, 2022

What do I need to know about the change in legislation for UK property-owning overseas entities?

Retrospective registration to the government’s new scheme is essential to avoid hefty fines and jail time for those in breach of the revised rules.

If you are part of an overseas entity that owns property or land in the UK, then it’s crucial that you keep reading. On 1 August 2022, new legislation came into force designed to “crack down on dirty money… and root out corrupt oligarchs and elites attempting to hide ill-gotten gains through UK property” – but it could cost businesses thousands of pounds in fines per day – or even up to five years in jail – if you fall foul of the new requirements. 

Critically, this doesn’t just apply to new or prospective foreign entities who wish to purchase land or property on Britain’s shores – it is also retrospective. As a result, any overseas entity that has purchased UK-based property since 1 January 1999 (or 8 December 2014 for those with property in Scotland) must register with the new scheme by 31 January 2023 or risk fines of £2,500 per day – and other significant penalties limiting trade.

Speaking of the scheme, Business Minister Lord Callanan said: “By getting this first of its kind register up and running at breakneck speed, we are lifting the curtain on those criminals attempting to hide their illicitly obtained wealth.”

Companies House Chief Executive Louise Smyth said: “The launch of this new register is a significant milestone in the history of Companies House and marks a turning point in our transformation as we look to play a much greater role in tackling economic crime.”

Clearly, we are fully in favour of interventions which can effectively root out criminals hiding money in assets within the UK, but making this change retrospective will, in our view, also give honest investors only a short window in which to avoid a heavy financial penalty.

Who does it apply to?

Any overseas entities that want to buy and sell UK property, or have historically. This applies to all property owned in England and Wales from 1 January 1999. Similar rules apply for property owned in Scotland from 8 December 2014. This only applies in Northern Ireland to properties now bought after 1 August 2022.

What is a registrable beneficial or managing officer?

The rules vary depending on the type of entity (for example, an individual person, public authority, trust or trustee) but it typically means members of the company that hold, either directly or indirectly, 25% of shares or voting rights within the enterprise.

Anyone who holds significant influence within your organisation could feasibly fall under this umbrella, so make sure you speak to an agent about any concerns or questions you might have in identifying those liable.

What if I miss the deadline?

Overseas entities only have until 31 January 2023 to register. If you do not comply with the Act, you could be fined up to £2,500 per day or get a prison sentence of up to 5 years. You’ll also face restrictions when buying, selling, transferring, leasing or charging property or land in the UK.

What do I need to do?

If you are a registrable beneficial or a managing officer of a UK property-owning overseas entity, you must register with the Register of Overseas Entities (RSE) within the next few months.

According to Gov.UK, the RSE is “held by Companies House and requires overseas entities that own land or property in the UK to declare their beneficial owners and/or managing officers. There will be severe sanctions for those who do not comply, including restrictions on buying, selling, transferring, leasing or charging their land or property in the UK

You will need to ensure that the registrable beneficial owners or managing officers undergo extensive validation checks before your entity can be officially approved and registered. This process is supervised under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 and they can only be carried out within three months prior to your registration date. 

Your agent will be able to advise you on the evidence you will need to provide on the registrable beneficial and managing owners. There is a small fee of just £100 to sign the register – which might put off some businesses – but the potential consequence of not doing so is a fine of up to £912,500 per year and even up to 5 years in prison

Why Kreston Global?

Kreston Global can undertake every element of the registrations and required verification checks on your behal We aim to build trust and confidence in the short and long-term goals of your business, with our clear and comprehensive understanding of the global tax landscape for property-owning overseas entities. Our services cover UK-based or international businesses. So, no matter the size of your company, we can help. 

Get in touch with one of our overseas entity tax experts today to meet the 31 January 2023 deadline or speak directly to Mark Taylor’s team here.