After initial delays, according to the Financial Times, the UK government is actively enforcing its landmark Register of Overseas Entities (ROE) legislation.
How many entities have been fined?
Britain has fined over 120 companies to date with possible court action and property charges threatened. According to Companies House, the first financial penalty for non-compliance was issued on 1st July 2023, and as of September 2023, the Department for Business and Trade stated that financial penalties worth around £660,000 had been issued.
How many Penalty Warning Notices have been issued?
Since the ROE began in August 2022, 4,772 Penalty Warning Notices alerting overseas owners of the imminent consequences if they fail to disclose beneficial ownership information have been sent to 3,103 entities that are yet to comply. However, Companies House acknowledges that some of the 3,103 entities may no longer exist.
Any foreign-owned entity holding qualifying UK property was required to register ownership details by 31st January 2023 or face stiff penalties.
What are the risks of non-compliance?
The c.3,000 overseas entities still not registered face substantial risks the longer they evade disclosure rules. Failure to comply within 28 days of a penalty notice allows the government to take court action or impose charges directly on UK properties. Daily fines for failing to register could be up to £2,500 per day, in addition to a penalty of between £10,000 and £50,000 per property. Restrictions may also be placed on the ability to sell, lease, or conduct other business related to unregistered UK real estate assets.
Why was the ROE created?
The ROE was implemented by the government in 2022 under the Economic Crime (Transparency and Enforcement) Act 2022 to increase transparency around foreign ownership of UK real estate. Historically expensive properties were purchased anonymously through offshore companies and trusts, hiding corruption and criminal proceeds. The registry requires identifying details on those who ultimately own, control or benefit from overseas entities that bought qualifying property since 1999.
The goal is to eliminate avenues for illegally gained wealth to flow unseen into UK assets. Submission directly to Companies House includes names, dates of birth, residential addresses and means of control. Registration non-compliance triggers escalating enforcement measures from warning notices to restricting transactions to daily compounding fines.
How 3CS can help
For overseas corporations and other foreign entities invested in UK property, time is running out for compliance. Those continuing to defy transparency legislation expose themselves to court-ordered enforcement, property charges or crippling fines the government has shown it will now pursue. Meeting disclosure rules remains imperative, even at this late stage, to limit the risks of major legal and financial consequences.
3CS can assist with ROE registration. We are an authorised UK verification agent, and our London-based team has considerable experience in dealing with overseas companies and international group structures and can assist with registration and the verification process required for compliance. 3CS offers a full range of corporate, commercial and property-related legal services. If you have any questions regarding the ROE requirements or would like assistance with registration or annual update filings, please get in touch with your usual 3CS contact.