Register of Overseas Entities and Verification Requirements

What is the purpose of the register?

  • The register has been established to increase transparency in the ownership of overseas entities that own UK land.  It came into force on 1 August 2022.
  • Registration with Companies House is required for any overseas entities who want to engage in transactions involving UK property or land. The beneficial owners or managing officers of the entity must be declared during registration and the overseas entity must update this information annually.
  • In England and Wales, the registration requirements apply to property acquired on or since 1 January 1999. In Scotland, they apply to property acquired on or since 8 December 2014 and in Northern Ireland, on or since 5 September 2022. Relevant entities have six months from 1 August 2022 to register with Companies House ie the 31 January 2023. Failure to register is considered a criminal offence.
  • The Department for Business, Energy, and Industrial Strategy (BEIS) has created guidance for those who may be conducting verification on behalf of an overseas entity. You can find the guidance here.

Why is it relevant to members and supervised firms?

A UK AML regulated agent must complete verification checks on all beneficial owners and managing officers of an overseas entity before it can register.  Firms registered for AML supervision with CIOT and ATT can therefore provide this service but have to request an agent assurance code from Companies House before they can file any verification statements.

If members decide to provide this service they can refer Companies House to the CIOT register of AML supervised firms here.

What are the risks with verification work?

  • BEIS states that “there is no risk-based approach to verification under the 2022/725 Regulations and so relevant persons must be confident they’ve seen documents and/ or information from reliable, independent sources to verify each piece of relevant information”. The "relevant persons" under the legislation have a great deal of responsibility.
  • Any member wanting to provide verification services for a foreign entity must realise that this is not at the same as the standards for client due diligence required under the Money Laundering Regulations.
  • If an accountant does not carry out verification correctly, they risk criminal prosecution and sanctions from regulators. Additionally, members may be held liable for negligence.  They should check that their PII policy covers them for the work.
  • Given the risks associated with this work we recommend that members exercise caution if asked to undertake verification work, particularly when considering any new relationship for the purpose of providing registration verification services.
  • The Accountancy AML supervisors have issued a risk alert to provide further guidance on the AML risks in dealing with verification work and this can be accessed here.

HMRC Guidance

HMRC have also issued guidance as a result of the introduction of the overseas entities register.  They will be using the register to identify tax non-compliance.  Further HMRC guidance is available here.

Members are reminded that Professional Conduct in Relation to Taxation provides further guidance to assist them when they become aware of possible errors in their clients tax affairs.

Updates since the introduction of the original legislation

Companies House have asked us to flag the Register of Overseas Entities (Verification and Provision of Information) (Amendment) Regulations 2022 came into force on the 12th January 2023. This SI amends the Register of Overseas Entities (Verification and Provision of Information) Regulations 2022 to address some practical problems highlighted by stakeholders since the Register of Overseas Entities opened for registrations on 1st August.

A summary of the changes this SI makes is provided below, which was also included in Companies House recent stakeholder newsletter:

1. Certain information no longer needs to be verified:

  • All required information about a government or public authority who is a registrable beneficial owner, other than its “status” as a beneficial owner, and whether it is on the sanctions list
  • Any information about the beneficiaries of a pension scheme trust as defined by paragraph 3 of Schedule 3A (Excluded Trusts) to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.  Please see more on how to register a pension scheme with HMRC here. 
  • Information which has been previously verified in relation to an overseas entity’s application for registration does not need to be verified again when it submits its update or applies for removal.

2. Certain information may be verified using documents or information from a reliable source which is not independent of the person whose identity is being verified:

  • A beneficial owner’s “status” - the condition(s) a person meets to be a beneficial owner
  • The date on which they became a beneficial owner of the overseas entity

3. The term “any other close business relations" has been replaced with "an individual who is an officer of a legal entity or legal arrangement of which the person whose identity is being verified is also an officer or who is engaged in a joint venture with that person".

4. The scope of the information which must be retained by a verifier will be expanded, so copies of any material obtained or received by the verifier must be retained.