In this Q&A, Matthew Allen, Senior Director – Corporate Services, and Will Turner, Director – Fund Services, analyse the first full year of the UK’s Register of Overseas Entities (ROE) being in use and explore why getting on the front foot could prove beneficial to overseas owners of property in the UK.
Q: The Register of Overseas entities legislation came into play in the summer of 2022. What’s the reaction been like from clients?
Matthew Allen (MA): It’s been just over a year since the Register of Overseas Entities (ROE) came into force in August last year . Although it was something that had been on the political agenda for a period of time, in practice the mechanics of it were delivered by the UK government incredibly quickly, against the backdrop of Russia’s invasion of Ukraine. The legislation was rushed through the entire parliamentary process in a little over a fortnight.
In that light, the reaction has been fairly sanguine – there’s understanding that this is a requirement and that this is the direction of travel as part of wider attempts to tackle financial crime – in this case by making UK property and land ownership more transparent. Though of course there has also been some frustration around the additional costs and administrative burden it all presents.
Will Turner (WT): The fact that the development and implementation of the ROE was so rapid means that, inevitably, it was launched without a huge amount of guidance. That’s meant that the majority of time between implementation and the deadline at the end of January this year was about understanding the requirements and ensuring compliance with filings and reporting deadlines as much as possible. Thankfully, most of the major issues have been ironed out.
Q: So why is it important for overseas entities to be thinking about reporting again now?
MA: Most Overseas Entities made their initial registration in December or January. The Overseas Entities have an annual reporting duty on the anniversary of their registration to inform Companies House if there have been or have not been any changes to overseas entity or its beneficial owners. This means that the reporting for the year will be coming around again soon and can involve collating a significant amount of data.
However, our feeling is that it’s particularly useful to get on the front foot and not only start thinking about keeping up with those annual requirements but getting ahead of them. It’s perfectly possible to file early, and arguably it’s a good idea to do that – doing so can offer some benefits, in particular because it resets the dial. That means the annual reporting deadline could move away from end of year to a date that suits investors better, spreading the administration duties and burden at a traditionally busy time of year. That could be incredibly helpful.
Q: How easy is it to make changes to filings?
WT: Again, the important thing here is to give yourself enough time, particularly if you know there are changes that need to be made to this year’s reporting.
Of course, some changes will be bigger than others – an address change, for instance, might be quite minor. But if there are changes in, for example, a beneficial owner, then those sorts of changes might be more substantive and, in those cases, there is going to be even more of a need to act early and work with an expert to ensure compliance.
Q: What’s the role of a verification agent in the reporting process?
MA: Initial registration to the ROE requires an approved verification agent, as does any changes that need to be declared as part of the annual update. JTC (UK) Limited (JTC) is an approved verification agent, and it simply means that we act as a link between overseas entities and Companies House, to verify that the information being submitted is accurate, up to date and complies with the latest regulations. JTC have qualified staff and have also developed a process that ensures that data provided to us is safe and processed securely. That high level of protection is really important to us and to our clients, while it also helps safeguard the probity of the register and upholds the quality of data it holds.
WT: We’ve also found that being able to tap into a global network like that of JTC’s has been incredibly helpful – for instance where there are cases of needing to access or check data or gain insights from overseas markets where investors are based. Being able to draw on JTC’s network in 20 locations around the world has been very helpful.
Q: What’s next on the horizon for compliance in this space?
MA: The past year has taught everybody a lot around what is needed to comply with the ROE rules. The coming year should, as we’ve highlighted, be about getting more on the front foot so that the burden can be reduced, and the requirements can be more easily embedded into organisational practice.
What we do know, though, is that further changes are on the way, in particular around the treatment of trusts on the ROE – we don’t yet know what form those changes will take, but it highlights the importance of early planning and engaging with experts if there is any uncertainty.
How can JTC help?
As an approved Verification Agent, JTC (UK) Limited has assisted multiple clients in navigating the ROE framework and new recent developments in the legislation which came into force on 1 August 2023.
We are able to conduct the verification and the new registration of the overseas entity (post-transition period) and, as required, submission of annual updates.
We provide the highest standard of professional administration, accounting, and investor reporting services while using our expertise and knowledge to enable real estate managers to focus on what they do best. In addition, our US teams specialise purpose-built solutions for Opportunity Zones focusing on Impact Investing and ESG.To find out more, please contact Matthew Allen and Will Turner directly.