HMRC puts overseas structures with UK properties under the microscope

As of August 2022, non-UK entities were required to register any property held in the UK on the new Register of Overseas Entities (ROE) under the control and management of Companies House. The deadline to comply with the ROE and register was 31 January 2023.

The UK authorities have access to the information on the register. HMRC have confirmed that they are comparing the details to the Land Registry and information contained in their data warehouse to check who the beneficial owners of the property are.

HMRC will use the information on the ROE to:

• Assess Annual Tax on Enveloped Dwellings (ATED) – this tax charge was introduced to disincentivise individuals from indirectly owning UK property and avoiding SDLT
• Ensure the overseas entities that have acquired UK property are subject to 15% SDLT charge
• Assess the gains made on disposals of UK property held by overseas entities
• Assess the profits made by renting UK property held by overseas entities
• Assess whether entities dealing in or developing UK land have created a permanent UK establishment for tax purposes

Improved technology and communications across the globe have enabled tax authorities to work together and assist each other to improve transparency and tax compliance. In the UK, government departments have increased access to information, particularly on taxable property and entities.

HMRC have warned that any overseas entities that need to bring their UK tax affairs up to date have until 28 February to register to disclose any historical tax liabilities.

If you would like to discuss any of the recent changes and how they might affect you, or the tax matters above, including ATED, please get in touch with our specialist real estate team.