This note provides a brief summary of Part 1 of the Economic Crime (Transparency and Enforcement) Act 2022 (the Act) which came into force on 1st August 2022 in part.
The implementation of the Act, what does this mean?
Overseas Entities owning property in the UK must register on a new register of overseas entities (ROE) maintained by Companies House.
It will be necessary to keep the register up to date the onus is very much on the Overseas Entity.
On 5th September 2022 registration of dealings of land (i.e. the sale or grant of a lease over 7 years) by an Overseas Entity in the UK will come into force.
Any Overseas Entity that owns property in the UK which it has owned since 1st January 1999 in England and Wales must apply for an entry on the register during the transitional period of 28 February 2022 and 31 January 2023. Failure to do so will prevent an Overseas entity from dealing with the unregistered property.
Similarly, an Overseas Entity which purchases/leases property in the UK will also need to be registered before an application to register the transaction can be make to HM Land Registry on or after 5th September 2022.
All companies that are registered outside of the UK that are incorporated will be caught by the Act irrespective of their registration position for tax.
Excluded from the Act are proprietors of registered charges.
The lack of registration by the Act is that of a criminal offence. It will also separately be a criminal offence under the Act to make certain dispositions.
Further the HM Land Registry will not register any purchase/lease which makes the transaction will not have legal effect. As it stands there is no ability to deal with the registration of an Overseas Entity retrospectively.
It is therefore critical that the registration for an Overseas Entity is made within the timeframe provided by the Act.
The Act is still in early stages of implementation and like registering an Option to Tax with HMRC there is a long lead time. To avoid delays in dealing with purchases/leases either acquiring or disposing Overseas Entities should act now.
If you are a director of an Overseas Entity and you own Property you are encouraged to speak to your accountant now to make sure the appropriate steps are taken.
For further information please contact Dina Parmar, Partner, Commercial Property.