UK: Disclosure Of Ownership Of UK Property

At the international anti-corruption summit today David Cameron has announced significant proposals that will affect foreign owners of UK property.

In today's announcement the Prime Minister has said that "Any foreign company that wants to buy UK property or bid for central government contracts here will have to join a new public register of beneficial ownership information before they can do so." This register will also apply to foreign companies who already own property in the UK. Importantly, while previous tax measures have focussed on residential property, this announcement appears to apply to commercial property as well.

The register of beneficial property owners appears similar in concept to the 'Register of People with Significant Control' ('PSC') that was introduced for UK companies in April this year. This requires the shareholders of UK companies and other persons who can exercise control over those companies to be identified on a register filed with Companies House.

The register is proposed as a measure to 'punish and drive out corruption' but will also have a significant effect on families and businesses who value their privacy. While it may be necessary and proportionate for HMRC and the Police to have access to beneficial ownership information in order to ensure the proper collection of Revenue and to combat money laundering and corruption, it is not clear why it is necessary for the public to have free access to that information as well.

The application of the rules to both commercial and residential property means that not only will individuals purchasing high-value residential property be subject to the new rules, but any foreign company establishing a branch in the UK and acquiring UK property may also find itself having to comply with onerous rules relating to the disclosure of its shareholders.

While a headline grabbing announcement has been made today, there remains a good deal of detail that needs to be understood:

Who is a beneficial owner?

  • In cases where a company has a single owner, the identity of the beneficial owners will be relatively straightforward to assess. However, there may be companies with a multiplicity of owners, where identifying beneficial owners is more complex. It is expected that listed companies, which are subject to their own disclosure requirements, will be exempted. The PSC register has a 25% threshold, below which shareholders do not have to be disclosed. A similar threshold may apply here, although it would be expected that family holdings would be aggregated.
  • Trusts, which can hold property for a range of individuals or purposes also present a complication in identifying a beneficial owner. Again here the approach of the PSC register may be instructive. In that case the identity of the trustee is disclosed as well as individuals who can control the actions of the trustees, but not beneficiaries per se. The approach of the Common Reporting Standard, which already requires the identification of beneficiaries with fixed interests in trusts, may also be followed.

How will compliance be assured?

  • At a practical level it appears that it will simply not be possible for a foreign company to be registered as the owner of a property at HM Land Registry unless it has first registered the details of its beneficial owners.
  • If the Register takes its cue from the PSC then it is likely that there will be criminal penalties for failing to comply. In situations where there is a failure to comply with the PSC, where shareholders do not disclose beneficial ownership information, they have the rights in their shares (to vote, receive dividends, etc.) restricted. Similarly, it may be contemplated that where adequate beneficial ownership information is not received for a property, use and/or ownership of that property could be restricted and ultimately be forfeited to the state.
  • It is also worth noting that today's announcement also included measures for police and law enforcement to directly access the (private) beneficial ownership registers that are maintained in the jurisdictions in which they are incorporated. In the event of non-compliance with the register, this will allow those authorities to directly verify information contained on the Register.

What other implications are there?

In 2015 the Government announced its intention from 2017 to charge non-UK domiciled trusts and individuals who owned UK residential property through companies to inheritance tax as if they owned the property directly. This would have represented a significant enforcement challenge for HMRC, where no accessible register of those ownerships exists. The introduction of the register of beneficial property ownership will significantly assist the collection of that tax.

Looking further ahead, it has been a matter of significant press comment that foreign companies that own residential property, particularly high value homes, could be sold without incurring any liability to SDLT that would be payable on the sale of the property itself. A UK register of the ownership of such companies raises the possibility that a charge to SDLT on the sale of shares in such companies could be introduced and as with the inheritance tax charge above, easily enforced.

What is the cost?

The Government appears to be fighting a war on corruption and in any war, there will be collateral damage. In this case the collateral damage is the privacy of a law-abiding individual and the infringement of "the right to respect for his private and family life [and], his home" (Article 8 – European Convention on Human Rights). There are many reasons why an individual may seek to preserve the privacy of their home as is illustrated by the case of the actress Emma Watson (whose troubles with stalkers is well documented), who purchased her home using a Panamanian nominee company to preserve her privacy. There is no tax advantage to be gained from such arrangements and there are no doubt numerous other examples of why an individual might seek to rely on basic privacy for their personal security. What the Government will do to address the legitimate concerns of such individuals remains to be seen.

Finally, these rules may do nothing to combat those who are willing to conceal the true ownership of assets. Following the release of the Panama Papers, the Russian cellist Sergei Roldugin has been reported as the beneficial owner of companies with billions of dollars of funds, but there does not appear to be any certainty that he is in fact the owner. Who would be surprised if the register of property ownership does not also reveal a number of other Sergei Roldugins?

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Lindsay Brown
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.