Last week the government set out a timetable to implement its much promised public register of beneficial owners of UK residential properties. Under this timetable draft legislation is likely to be published this summer but with the register not being operational until 2021. This follows the government’s announcement last month that this register was still on the agenda and formed part of its wider anti-corruption strategy.
This is a measure which has loomed large for many international owners of UK residential property who continue to own their UK residential properties via offshore companies. It has always been a question of when and not if this register would come into effect in light of the UK’s commitment to widening the net of transparency.
It is too early to say whether the proposed register will reflect the government’s proposal as set out in its April 2017 consultation document, a summary of which can be read here. It is also too early to say whether the government’s proposed timetable will remain as proposed or whether it is subject to change, with criticism already voiced by some that the register should become operational sooner than 2021. We will provide more information just as soon as the draft rules have been published and more information becomes available.
There remain genuine reasons why many property owners continue to own their properties via offshore companies, most notably to preserve their privacy, even if there no longer remain any tax reasons for doing so. This announcement by the government will soon mean that for such property owners there is one less reason to retain their existing ownership structures.
The expenses and taxes associated with restructuring have to be borne in mind and these may make any restructuring costly, particularly if there is borrowing in place.
Further, the exact detail of the rules in relation to the register will need to be considered carefully, in particular whether the non-public registers of beneficial owners of companies in certain offshore jurisdictions might well rank as equivalent for the purposes of the UK’s register, and remove the need to disclose such information in the UK. This is certainly one aspect of the government’s previous consultation which was far from certain.