Potential Imprisonment for Foreign UK Real Estate Investors Ignoring New UK Law
14 Feb 2023
With the deadline fast approaching on the 31st of January, many rushed to register their companies on the Overseas Entities Register due to the uncertainty of the methods of enforcement awaiting them post-deadline.
This is the UK government’s latest attempt at transparency and attempt to crack down on money laundering within the country. Since the law’s passing, foreign companies have been given a 6-month grace period to allow them enough time to register.
But how does the land lie now?
Fast forward to the present, the deadline has now passed, and many companies are yet to submit their application despite the register launching in August 2022.
The process of registering an overseas entity involves the identification of the ultimate beneficial owners of the company that owns land in the UK.
However, the BBC recently reported findings from Land Registry records that around “18,000 offshore companies who between them hold more than 50,000 properties in England and Wales either ignored the law altogether or filed the information in such a way that it remains impossible for the public to find out who the individuals are who ultimately own and benefit from them”.
Many have made use of exemptions to hide their information from the public and authorities.
Those who have taken a passive stance on the introduction of this new system have been restricted from dealing with their land.
Since the 5th of September 2022, the Land Registry have already begun placing restrictions on the titles of freehold and leasehold estates owned by overseas entities.
This means as registered proprietors, they are:
- Unable to lease
- Unable to charge
- Unable to dispose of the land as they please until they obtain an Overseas Entity ID issued by Companies House.
Possible Imprisonment?
It has now been two weeks since the deadline, and for every day that passes, the company and its officers commit an offence by failing to comply with their obligation to register with Companies House.
Apart from restrictions on dealing with land, there are more severe consequences of failing to register that amount to severe financial penalties and potential criminal proceedings, including imprisonment.
A government spokesperson told the BBC that Companies House are now:
“assessing and preparing cases for enforcement action” and the UK government is considering giving Companies House further powers through legislation to pursue those companies who fail to comply.
We urge any company that still needs to register to seek advice as soon as possible.
At Asserson, our Real Estate team has successfully registered many overseas entities onto the register and has developed expertise in the registration process.
Please do not hesitate to contact us for further information.
David.Prais@asserson.co.uk or Jonathan.Perrin@asserson.co.uk