UK: Beneficiaries of foreign trusts will not be named on public register of property-owning entities
The UK government has published its final plan for a public register of beneficial ownership of foreign
companies and entities that own UK property.
The register, which will come into operation in 2021, is intended to tackle corruption, in particular the use of
‘dirty money’ to buy high-value property in London. It will show who owns and controls overseas companies and
other legal entities that own UK property. All legal entities will be in scope, including trusts.
However, the beneficiaries of trusts will not be named on the register. This decision was made for confidentiality
reasons, and because the information is, or ought to be, already available to the authorities.
‘Unlike companies, trusts are typically used by private individuals for managing family-owned assets, including
for minors and vulnerable family members’, says the paper issued by the Department for Business, Energy &
Industrial Strategy (BEIS), which is leading the project. BEIS notes that the Trust Registration Service recently set
up by HMRC makes trust data available to law enforcement bodies, allowing them to identify who owns and
benefits from trusts.
‘Publishing these persons’ details would not be proportionate and effective, especially as disclosure would
undermine family confidentiality’, says the BEIS paper.
The definition of beneficial owner is to be the same as that used in the existing ‘persons with significant control’
(PSC) register of beneficial ownership of UK companies, adapted where necessary to cover entities that are not
similar to companies limited by shares. The government intends to require the same information for the new
property ownership register as is required under the PSC regime. Entities unable to give information about their
beneficial owners will have to provide information about their managing officers.
One of the most controversial issues raised by the new register is the transitional period for companies that
already own UK property. Many respondents to the original consultation paper felt that one year was not long
enough for overseas entities to comply. BEIS now agrees with this view and will give a longer period of grace.
Exactly how long is yet to be decided, although it will allow overseas entities enough time to either comply or to
sell the property. Nor has BEIS decided on the frequency of updating; it is likely to be either one or two years,
rather than being driven by events such as disposals. There will be a new criminal offence for company officers
of failing to keep their entry up to date.
BEIS noted that this would be the first register of its kind in the world, but admitted that this brought the
drawback that there were no existing experiences to draw upon. ‘We must be careful to ensure it strikes the
right balance between improving transparency and minimising burdens on legitimate owners’, commented
Business Minister Andrew Griffiths.
There is some unease in the UK property sector about the impact of the new law on property prices. Most
respondents to the consultation thought the new register could have a negative impact on the UK property
market by deterring overseas investors and making the UK property market less competitive on a global level.
BEIS has commissioned research to look into this.
Draft legislation will be published in the summer, and introduced into Parliament early in the second session.
The new legislation, said Griffiths, would ‘help authorities come down hard on frontmen seeking to conceal their
paymasters’ true identities’.
The register will also be used to determine which foreign companies are permitted to tender for public contracts
in the UK.
Source:Step