The latest Companies House business plan makes tough reading for offshore corporate owners of UK property, with the annual update championing plans for a register of their beneficial owners. The company registrar has confirmed that it will be assisting the Department of Business, Energy and Industrial Strategy (BEIS) and plans to work in conjunction with HM Land Registry in developing a register extending to beneficial owners of overseas companies holding UK residential and commercial property.
This will implement the Government’s ideological attempt to crack down on money laundering and financial crime in the UK, and stands to be the first of its kind in the world. It is no secret that the use of offshore companies to launder money via the UK property market is an increasing problem. The scale of the issue is in fact much larger than many might assume. Companies House recently reported that over 75% of properties currently under investigation use off-shore corporate secrecy.
That said, for the many legitimate offshore entities that choose to invest in the UK, this register will mean more administration, more fees, and more ‘red tape’, aside from a perceived loss of privacy given that information will be placed on a public register for all to see in a similar way to the PSC (People with Significant Control) Register.
Arguably, reporting requirements in some overseas territories are lax in comparison to the UK. This allows criminals to cover their tracks behind such companies by taking advantage of their comparative secrecy. By introducing the requirement, the UK Government hopes to clearly send a message that if you own property in the UK, then you will be held accountable in the UK.
It has yet to be decided how the register will work and be enforced. However, there have been suggestions that if an overseas company fails to comply with the requirements then they could face criminal sanctions as well as the ability to lose the power to sell the property.
Companies House will be releasing updates as plans develop over the next few years but have confirmed that the register is unlikely to be introduced until around 2021.
For further information and legal advice relating to the possible changes for offshore corporate owners of UK property, please contact our Corporate Law Department – call us or email by using the form to the right.The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as of April 2018.