In its commitment to making company and property ownership more transparent, the UK government, in 2016, announced its intention to introduce a public register of company ownership, recording information about who owns and controls UK companies. The proposed register will require overseas companies that own or buy property in the UK to provide details of their ultimate owners.
The Government has committed to publish a draft bill in summer 2018 and introduce it to Parliament next summer (2019). Following legislation, the register would be implemented by early 2021.
The key objectives for the new register is to ensure that the UK property market is seen as fair, transparent and clean in order to attract the right investors and owners, and to crack-down on money laundering and other illegal activity through anonymous overseas entities investing in the property sector.
The register is to be held at Companies House and publicly accessible without charge. All overseas entities that own or buy UK property will have to supply beneficial ownership information to Companies House and apply for a registration number.
The Government has indicated that there would be a one year transitional period during which time overseas companies that currently own property have to comply with the register requirements.
Last year’s consultation on these proposals (and recent debates on the topic in the House of Lords) indicate that those who do not comply with disclosure requirements will not only face criminal sanctions but will also lose the ability to sell the property or create a long lease or legal charge over it. A response to the consultation regarding the register, which closed on 15 May 2017, is expected to be published shortly.
Leasehold interests are proposed to be in scope where the lease is required to be registered and the original term is for more than 21 years.
This new register will accompany other UK and international initiatives, like automatic exchange of tax rulings, Country-by-Country Reporting, FATCA and CRS to improve transparency, encourage reporting, combat tax avoidance and facilitate necessary investigations by tax and other authorities.