6th November 2023
The Register of Overseas Entities came into force in the UK on 1 August 2022 through the Economic Crime (Transparency and Enforcement) Act 2022 (the Act), designed to combat money laundering and tax evasion.
This now means that if you own or control an overseas entity that owns UK property or land, you need to update your information on the Register of Overseas Entities every year. An update statement is a document that confirms or updates the information about your overseas entity and its beneficial owners or managing officers. Updating your information is now a legal requirement and non-compliance can lead to severe consequences.
When and how do you file an update statement?
You need to file an update statement every year, within 14 days of the anniversary of your registration date. To file an update statement, you need to review and verify the information regarding your overseas entity and its beneficial owners or managing officers, to ensure that the information on the register is correct and reliable. These checks must be done independently by a UK-regulated agent with an agent assurance code, which will be provided with submission of the update statement. The agent will check the information that you provide and will confirm that it is valid and authentic. The agent will also submit a verification statement on your behalf.
Verification checks must be completed within three months before the date of your update statement. If not done within this timeline, your update statement will be rejected.
It should be noted that if the overseas entity is a trust, a paper form will need to be submitted instead, since trusts have different rules and requirements for registration and verification.
Consequences of not filing
If you fail to file an update statement on time, you may face serious consequences. Companies House has issued guidance on how it will enforce penalties and ensure the integrity of the register. These include:
- Committing a criminal offence, which can lead to prosecution, fixed or daily rate penalties, up to £50,000 for each property.
- Having an invalid overseas entity ID, which means you cannot sell, lease, or charge your UK property or land. The overseas entity will not be able to purchase any new land or property in the UK either.
- Having a public note of non-compliance on the register, which can damage your reputation and trustworthiness.
Therefore, it is important to file an update statement every year and keep your information accurate and up to date.
Although the update statement is a yearly requirement, each overseas entity should be checking whether any of the information it provided with its original application has changed – importantly, an update statement can be submitted more than once a year. However, even if only done once a year, regularly checking for any changes will help officers to be prepared to submit the overseas entity’s update statement in a timely manner, meeting their compliance requirements and avoiding any potential consequences.
In support of the Economic Crime (Transparency and Enforcement) Act, the Economic Crime and Corporate Transparency Bill (the Bill) meanwhile has received Royal Assent and is now law. We will continue to analyse all parts of the Bill that are relevant for company officers to be aware of. In the meantime, you can review our previous analysis below:
- New identity verification process
- Impact on company incorporations
- New powers for the Registrar
- New rules for officers
For assistance with your corporate governance duties, contact Katie Holden, Company Secretarial Manager.