Following a proposal in 2017, HMRC have released their response on how they plan to implement and maintain a register of foreign owners of overseas entities holding UK properties.
This is the first of its kind in the world and has been touted by HMRC as a means of tackling corruption. The register is set to be fully operational in 2021.
Concerns were raised in the consultation over privacy for private individuals owning properties through trusts. The government has confirmed that the register will include trusts, although there will be flexibility to permit exceptions where there is already transparency of beneficial owner information, presumably through the Trust Registration Service set up recently.
There have also been concerns raised over the burden of administration, particularly at a time when non-resident landlords will be transitioning to corporation tax in April 2020.
It marks a significant change, as maintaining the register will enable HMRC to have oversight of sales of indirect sales of property (for example by way of shares in overseas companies) allowing them to better enforce the new capital gains tax charge on non-residents owning UK property from April 2019.
As an aside, while currently SDLT or stamp duty is not chargeable on indirect sales of properties by way of shares in overseas companies (provided the shares have no UK situs), it is worth noting that this register would facilitate enforcement if HMRC were to shift their policy in the future.
We look forward to seeing the draft Bill and hope the Government have met their aim in striking the right balance between transparency but ensuring Britain is firmly open for business.