Overseas entities that bought UK property before 1st August 2022 must register with Companies House by 31st January or risk a fine and jail time.
The Economic Crime (Transparency and Enforcement) Act 2022 applies to offshore companies, partnerships and foundations which, according to Land Registry data, own 93,877 properties in England and Wales.
Individuals who want to protect their privacy often choose to hold UK property through an overseas company but keeping your name off Land Registry records comes at price, says accountancy and business advisory firm BDO, as they must now pay stamp duty of 17% when buying UK residential property.
Dawn Register (pictured), head of tax dispute resolution at BDO, says the government is conscious that a previous lack of transparency allowed those wanting to conceal their identify for other reasons – sometimes illicit ones – to invest in UK property.
“This is why part of the new registration process involves declaring the beneficial owners of the company to Companies House,” she explains.
Criminal offence
“Failure to register is a criminal offence, and the officers of the entity could face a fine and up to two years in jail – or five years in some extreme cases – if they do not comply.
“Similarly, failure of beneficial owners to supply information can also be a criminal offence under UK law so it’s important that affected parties take urgent action to comply.”
The register will be publicly available and HMRC is likely to take a keen interest in the companies and individuals that appear, possibly questioning them about the source of funds to purchase property.
Overseas landlords will be taxable on UK rental income and HMRC will also want to check whether any Annual Tax on Enveloped Dwellings is due; this is generally payable on residential property with a value of more than £500,000.
Read the complete tax guide for landlords.
