How is trust reporting under the Register of Overseas Entities changing after 4 June 2024?
The Economic Crime and Corporate Transparency Act 2023 included some significant changes for reporting requirements under the Register of Overseas Entities (the ROE), particularly for entities connected with trust structures.
Some of these changes were brought into force for new registrations on the ROE with effect from 4 March 2024 under the Economic Crime and Corporate Transparency Act 2023 (Commencement No. 2 and Transitional Provision) Regulations 2024 (the Commencement Regulations). Specifically:
- Persons for whom overseas entities hold UK land interests as nominee now qualify as registrable beneficial owners
- All trustees meeting the beneficial ownership conditions now qualify as registrable beneficial owners
- The exemption for beneficial owners holding their interests via corporate trustees is now removed
For a detailed discussion of the effect of the changes, please see: here
How will this affect the updating duty?
The option to provide a registered office instead of a principal office for overseas entities and corporate beneficial owners or managing officers was removed for new registrations and update statements with effect from 4 March 2024, so that now only a principal office can be provided.
However, whilst the wider changes to trust reporting referred to above came into force for new registrations from 4 March 2024, for any overseas entities that were registered before this date, a transitional provision in the Commencement Regulations provides that the changes will apply when they deliver the statements and information required under the updating duty on the first occasion after 4 June 2024.
As a reminder, the Economic Crime (Transparency and Enforcement) Act 2022 imposes a duty on each registered overseas entity to deliver an update statement on an annual basis.
The statement must either confirm that the information held on the ROE is accurate, or provide details of changes or new information as appropriate.
Information does not need to be re-verified if it has been previously verified and submitted to Companies House in relation to the same overseas entity.
This means that where an update statement confirms no changes, the process is a simple one. However, where there are changes to the information that has been reported, or new information is being submitted, this will need to be verified by a UK regulated agent. Those who have dealt with an entity’s initial registration on the ROE will attest to how time-consuming and cumbersome the verification process can be, particularly for trust structures.
The result of the changes to reporting means that after 4 June 2024, when overseas entities come to file their next update statement, the analysis which was carried out previously will need to be revisited, as the information held on the ROE may no longer be accurate under the revised rules. To the extent that the information held on the register needs to be updated, it will need to be verified.
Is there a benefit to filing the update statement early?
There are two dates to consider in this context:
- the statement date (being the end of the update period, at which time the information submitted must be accurate); and
- the delivery date (being the date that the statement is submitted Companies House, which must be no later than 14 days after the statement date).
The reference to “delivers” in the transitional provision indicates that it is the delivery date which is relevant for the purpose of the upcoming changes.
Initially, the update period is 12 months beginning with the entity’s registration date. For example, an entity with a registration date of 1 June 2023 will be required to deliver a statement dated 31 May 2024 no later than 14 June 2024. To ensure that the upcoming changes to reporting do not apply the update statement, the entity could therefore ensure that it is delivered by 4 June 2024.
The benefit of this would be that this year’s filing is simplified and any complexities introduced as a result of the revised rules are postponed until next year’s filing (by which time further changes to reporting may be brought into force in any case).
This will be particularly advantageous if the information originally submitted remains correct under the current requirements (including the provision of a principal office and not a registered office where these are different), as the statement can be filed without the need for such information to be verified.
It is worth noting that an entity is also able to shorten its update period by filing a statement with a date which precedes the end of the update period.
An entity with an initial registration date of 11 July 2023, for example, will have an initial update period ending on 10 July 2024. The first statement dated 10 July 2024 will be due by 24 July 2024, and so will be subject to the upcoming changes to reporting.
The entity may therefore choose to shorten its update period by filing a statement which is delivered by 4 June 2024 (and dated no earlier than 14 days prior to such date) to take advantage of a simplified return as described above. The entity’s update period would then be reset to 12 months beginning with the day after the statement date.
