Thousands have failed to place themselves on the Register of Overseas Entities. This means they could face prison sentences of up to five years and fines of up to £2,500 a day.
It is vitally important, therefore, that anyone in such a situation seeks specialist advice to reduce the potential impact of not having registered.
What is the Register of Overseas Entities?
Created by Section 3 of the Economic Crime (Transparency and Enforcement) Act 2022, the Register of Overseas Entities (ROE) is an attempt to make it more difficult for foreign individuals to launder money.
The Act made it a legal requirement for overseas entities that own UK land to place themselves on the ROE. It defined an overseas entity as a legal entity that is governed by the law of a country or territory outside of the UK. Such entities are also required to identify their “registrable beneficial owners”. Registering on the ROE allows them to buy and sell land or property in the UK. After registering, the overseas entity will get a unique Overseas Entity ID to give to the Land Registry when it buys, sells, transfers, leases or charges UK property or land.
The ROE applies to property bought since January 1999 in England and Wales, and since December 2014 in Scotland. The government sees it as a key part of its attempt to stop the flow of “dirty money’’ into the UK. Which is why those who did not meet the deadline need to seek immediate help to minimise the damage that can be caused by not registering.
What are the penalties for not registering?
Overseas entities had until 31 January 2023 to register. Failure to register by this date is a criminal offence, punishable by imprisonment or fines.
What if you missed the registration deadline?
Despite the severe penalties for not registering by the deadline, official figures show that only 19,510 out of a total 32,440 overseas entities had declared their beneficial owners by 31 January 2023. As a result, the government has made it clear that it will use all the means at its disposal to target the foreign companies that have not met their ROE obligations.
Companies House had written in August 2022 to overseas entities which already owned or leased land (for a term of more than seven years on or after 1st January 1999) in the UK, highlighting the need to register. It followed this up with a second letter three weeks before the deadline, emphasising the need to comply with the obligations.
Now, letters are being sent out to those who have not placed themselves on the ROE.
With the consequences of not registering being so severe, many of those in this situation may require advice on how best to proceed. If you are not based in the UK, it may be a challenge to ensure you are both aware of and complying with your ROE obligations. You may also be unsure about how to respond to a letter notifying you that you did not register before the deadline passed.
How we can help and advise you.
At Rahman Ravelli, we are ideally placed to assist as we have regular dealings with the relevant authorities. We understand the difficulties that may have led to the deadline being missed.
Our specialist lawyers are experts when it comes to devising the most appropriate course of action and making representations to those who have the power to make the all-important decisions about penalties being imposed.
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