UK to ‘use all tools’ available to crack down on thousands of firms that missed property register deadline
The UK government has vowed to “use all the tools” at its disposal to crack down on the thousands of overseas companies that have failed to report their beneficial owners with Companies House’s new property register.
The government pledged to fine and prosecute the “oligarchs and non-compliant organisations” that missed yesterday’s deadline to declare their ultimate owners on the newly-launched Register of Overseas Entities.
The deadline comes six months after Britain first introduced its the register last August, which is aimed at boosting transparency around property ownership by revealing the individuals that own land and real estate in the UK through companies and organisations based offshore.
The government has claimed criminals use “opaque corporate structures” to buy UK land and property to launder their “dirty cash.”
However, only 19,510 out of a total 32,440 overseas entities have actually declared their beneficial owners on the new register, official figures show.
“We will be using all the tools at our disposal, including fines and restrictions, to crack down on foreign companies who have not complied,” Lord Callanan, UK business minister, said.
Managing directors in the more than 10,000 entities that have failed to register their beneficial owners could face prison sentences of up to five years and fines of £500 a day.
Companies House chief executive Louise Smyth said: “We cannot be clearer in our message to these entities; if you ignored warnings and fail to register before the deadline, you will face consequences.”
“This includes not only the prospect of restrictions on your land or property but also a possible fine, prison sentence, or both.”
Susan Hawley, executive director of Spotlight on Corruption, said the current situation is a “great opportunity” for Companies House to “walk the walk by imposing hefty fines and restrictions” on those who failed to meet the deadline.
Hawley, however, noted “the big question is whether Companies House has the necessary resources in place to undertake this kind of enforcement activity”.
The launch of the new register comes as the UK government is pushing forwards with efforts to overhaul Companies House, by boosting its powers and making new funding available to the agency.
The planned reforms, which are set to be introduced as part of the Economic Crime and Corporate Transparency Bill, will see the extra £20m funding used to hire investigators and analysts to bolster the agency’s enforcement abilities.
Barry Vitou, a partner at HFW, however said the Economic Crime bill has not yet come into force as he argued Companies House is “under resourced” and not currently set up to investigate and enforce breaches.
“Levying a fine is probably the easy bit, collecting the money may be somewhat harder,” Vitou added.
Aziz Rahman, a senior partner at Rahman Ravelli, said that while the government “is making all the right noises about coming down hard on those who did not register” investigators may struggle to “truly hold to account those who are ultimately responsible,” if they hide behind a “maze of complex corporate structures”.