As we approach the first anniversary of the launch of the Register of Overseas Entities by Companies House, it is essential for overseas entities to review the corresponding deadlines for filing annual update statements.
The Register of Overseas Entities was established on 01 August 2022 by the Economic Crime (Transparency and Enforcement) Act 2022 as a response to mounting concerns about money laundering, tax evasion, and other illicit financial activities facilitated through the use of UK property by anonymous foreign companies. Prior to its establishment, such entities could purchase and hold property in the UK without disclosing the identities of their beneficial owners, allowing for a convenient veil of secrecy.
The register aimed to address this issue by mandating that overseas entities that own or wish to acquire UK property must now disclose their ultimate beneficial owners on the register. Overseas entities cannot buy, sell, transfer, lease, or raise a charge against land in the UK unless they’ve registered with Companies House. This also applies retrospectively to overseas entities that bought property in England and Wales since 01 January 1999 (or since 08 December 2014 in Scotland).
The introduction of this register marked a significant step in enhancing transparency and combating financial misconduct, helping to bring the UK in line with global efforts to promote corporate integrity.
Why is the anniversary important?
As part of the obligations imposed by the Register of Overseas Entities, companies are required to submit annual update statements to Companies House. These statements must confirm the accuracy of the information previously provided and disclose any changes in beneficial ownership.
The deadline for filing the annual update statement is set at one year after the initial registration date, or last update statement filing. Failure to submit the update statement within 14 days of the deadline may result in financial penalties or prosecution. Not filing the annual update statement on time also means the overseas entity ID will not be valid, and the company will not be able to buy, sell, transfer, lease or charge property in the UK.
Although Companies House have promised to send email reminders to entities before the deadline to provide an update, it is advisable to check the update statement date on the Companies House Register.
Enforcement
Companies House is in the process of finalising its enforcement approach, and hopes to have completed it later this year. However, as it stands, the enforcement framework provides that failing to comply with the duty to update could lead to a fine, and if the contravention continues, a daily default fine.
It is important to note that liability for continued contravention falls on every officer of the entity, as well as the entity itself, regardless of who caused the initial contravention.
Filing false or misleading information can lead to criminal conviction and imprisonment.
How to file
Entities or their agents will be able to file their update statement online (using the overseas entity’s authentication code), unless there are any trusts involved in the overseas entity whether Companies House has already been notified of these or not. These entities will need to file a paper form which Companies House will make available in the coming weeks.
If any information has changed since the entity registered, a UK-regulated agent must complete verification checks to confirm that the information is still accurate. If nothing has changed, no additional verification will be needed.
Companies House has stated that entities will be able to file their update statement online from the beginning of August.