What is the Register of Overseas Entities (ROE)?
One of the main purposes of the Economic Crime (Transparency and Enforcement) Act 2022 was to create a register of non-resident entities which owned property in the UK.
An overseas entity for this purpose is a body corporate, partnership or other entity governed by the law of a country or territory outside of the United Kingdom and is a legal person under the law by which it is governed.
Coming into force in the UK on 1 August 2022, overseas entities who own UK property and want to buy, sell or transfer land in the UK, must register with Companies House and tell them who their registerable beneficial owners or managing officers are.
This will also apply retrospectively to overseas entities who bought property or land on or after:
- 1 January 1999 in England and Wales
- 8 December 2014 in Scotland
These overseas entities needed to register with Companies House and tell them who the ultimate beneficial owners or managing officers are by 31 January 2023. This applied even if overseas entities are not looking to buy, sell or rent their properties.
Entities that had disposed of interests on or after 28 February 2022 were also required to register by this deadline.
Non-compliance is a criminal offence, punishable by daily fines of £2,500 and a maximum of a five-year prison sentence.
A brief background to overseas entities
Before the Economic Crime (Transparency and Enforcement) Act 2022, there was no central database to determine which overseas entities owned UK property.
The Act required these overseas entities, outside of UK mainland, to apply for registration with Companies House to receive a registration number in addition to submitting returns each year to confirm that in the preceding 12 months there have been no changes to their properties.
How will the Register of Overseas Entities (ROE) impact UK resident landlords?
Many landlords may be questioning how the ROE will relate to them. It will impact you if you are considering transacting with an overseas entity.
For example, if you are planning on buying property from an overseas entity, then you will be unable to register the transaction unless you have the appropriate ID number from the overseas entity selling the property. The same applies if you are considering selling your property to an overseas entity, unless it is personally held.
Ultimately, whether you are looking to transact with an overseas entity, or are one, then it is important you have the appropriate ID number to prevent delays in transactions.
Even in cases where an overseas entity sells, grants a lease of more than 7 years, or charges the property prior to 1 August 2022, the Act may still be applicable.
Any disposals that an overseas entity made between 28 February 2022 and 31 January 2023 were also required to be reported to Companies House. The overseas entity did not have to join the ROE in this scenario, but it did have to provide specified information about its beneficial owner(s) to Companies House. The information required was largely the same as that required to register on the ROE and must also have been provided by 31 January 2023.
This obligation to notify will not apply if the overseas entity has an ID before 1 February 2023 e.g. where the overseas entity also owns other UK property.
For overseas entities, the Act will apply to the grant or assignment of any lease that was originally granted for a term of more than 7 years.
Even though leases with terms of seven years or less will be exempt from the Act, parties may nevertheless want to take into account some of the wider consequences of a failure to comply with the Act. For example, a criminal offence will be committed if the company is an overseas entity and has disobeyed the requirement to initially register on the ROE or the requirement to annually update the ROE.
The Act will not prevent such a landlord from entering into a short lease, but a tenant may be concerned about entering into a transaction due to reputational and regulatory concerns. It is recommended to check the position at Companies House whenever dealing with an overseas entity in connection with property.
The article was written by Nikita Cooper, a Tax Director within the firm. At Price Bailey, we work alongside providers that can assist you with the formal ROE registration process. Should you require any further information, you can contact Nikita using the form below.
We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.
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