In recent years, there has been a positive deluge of reporting initiatives affecting UK individuals, entities and structures with a UK connection. Some of these have come from the USA (so-called “FATCA”), some from the OECD (the Common Reporting Standard), others from the EU (as a result of the 4th Anti Money Laundering Directive) and others are simply ground-breaking initiatives by the UK government.
In this article, we focus on the three current or proposed registers of beneficial ownership in the UK. In each case, failure to comply with the registration requirements can result in civil or criminal penalties.
Register of Persons with Significant Control (PSC Register)
Since April 2016, every UK company, and certain partnerships, has been required to report details of “persons with significant control” (PSCs) to Companies House. The information is then available to the public through the Companies House website.
The definition of a PSC includes an individual who directly or indirectly owns more than 25% of the shares, holds more than 25% of the voting rights, has a right to appoint or remove the majority of the board and/or has a right to exercise, or actually exercises, significant influence or control over the company.
The reportable information for each PSC includes their name, correspondence address, month and year of birth, nationality and country of residence.
Trusts Register of Beneficial Ownership
With effect from June 2017, the trustees of so-called “taxable relevant trusts” have been required to report details of “beneficial owners” to HMRC using the new Trust Registration Service. The definition of taxable relevant trust includes all trusts that are liable to pay UK tax on UK source income or UK situs assets.
The information reported to HMRC is used to maintain a central register of trusts, which is only available to HMRC and certain law enforcement agencies, but not the general public.
The definition of a beneficial owner of a trust includes the settlor, trustees and beneficiaries, as well as any individual with control over the trust (e.g. a protector).
Overseas Companies Holding UK Property
The government has confirmed that it will introduce a new register of the beneficial owners of overseas entities holding UK property. Draft legislation has been published for consultation and it is anticipated that these provisions will be introduced with effect from 2021.
Broadly speaking, the draft legislation mirrors the requirements of the PSC register for UK companies. In addition, an overseas entity will be unable to sell property or grant security or a 7 year lease over the property unless the entity has complied with the registration requirements.
The UK government is at the forefront of the global drive for transparency. The PSC Register was the first of its kind globally and the proposed register of overseas companies is also anticipated to be a world first. Further changes must also be expected as a result of the 5th EU Anti-Money Laundering Directive, which includes a requirement for information on the beneficial ownership of trusts to be publicly available (subject to an ill-defined “legitimate interest” test).