Significant proposals announced by UK Government will affect foreign owners of UK property
16 May 2016
At the international anti-corruption summit which was held in London last week, David Cameron announced the introduction of a publically accessible register of the beneficial owners of UK property - "Any foreign company that wants to buy UK property or bid for central government contracts here will have to join a new public register of beneficial ownership information before they can do so."
This register will also apply to foreign companies who already own property in the UK. Importantly, while previous tax measures have focussed on residential property, this announcement appears to apply to commercial property as well.
The register of beneficial property owners appears similar in concept to the 'Register of People with Significant Control' ('PSC') that was introduced for UK companies in April this year. This requires the shareholders of UK companies and other persons who can exercise control over those companies to be identified on a register filed with Companies House.
The register is proposed as a measure to 'punish and drive out corruption' but will also have a significant effect on families and businesses who value their privacy.
While it may be necessary and proportionate for HMRC and the Police to have access to beneficial ownership information in order to ensure the proper collection of Revenue and to combat money laundering and corruption, it is not clear why it is necessary for the public to have free access to that information as well.
The application of the rules to both commercial and residential property means that not only will individuals purchasing high-value residential property be subject to the new rules, but any foreign company establishing a branch in the UK and acquiring UK property may also find itself having to comply with onerous rules relating to the disclosure of its shareholders.
While a headline grabbing announcement has been made by the UK Government, there remains a good deal of detail that still needs to be understood.