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The new Economic Crime Act: an update

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As has been widely reported, the Economic Crime (Transparency and Enforcement) Bill was fast-tracked through Parliament and is expected to come into force later this month. The Bill completed its second and third reading in the House of Commons on 7 March 2022 and was rapidly moved to the Lords, before receiving royal assent on 15 March.

As set out in a previous article (‘The new Economic Crime Bill’ (Mukul Chawla QC & Chris Ormond), Tax Journal, 11 March 2022), Part 1 of the Act seeks to establish a public register of beneficial owners of overseas entities owning land in the UK. The registration requirement will apply to all overseas entities in respect of property purchased on or since 1 January 1999 in England and Wales. Importantly, this register will be public.

Amendments to the Act

In its passage through the Commons, four key amendments were made to the legislation of which practitioners should be aware.

  1. The transitional period within which certain overseas entities must register as an overseas entity has been reduced from 18 months to six months.
  2. The new disclosure requirement on overseas entities that dispose of land between 28 February 2022 and the end of the transitional period to provide information about its beneficial ownership.
  3. Where the overseas entity discloses that a registrable beneficial owner is a trust or of an equivalent arrangement that under the law of its country is of a similar character to a trust, the overseas entity must provide additional information about the trust (i.e. the name of the trust, date of creation and information about the settlor, beneficiaries and protectors). This information will be unavailable for inspection on the public register, although it may be disclosed to HMRC or other law enforcement agencies.
  4. The Land Registrar will be required to enter a restriction prohibiting certain dealings in land by an unregistered overseas entity. As introduced, the Bill provided that this would not take effect for the first 18 months after the provisions come into force, but this has been reduced to six months.

Although opposition parties are cooperating to rush the legislation through, concerns have been raised. First, the length of the above transitional period was seen as too lengthy by some MPs who proposed reducing this to 28 days. Second, the conditions that a registerable beneficial owner includes someone who holds 25% or more of the shares or voting rights in an overseas entity were seen as too high (an amendment was tabled to reduce this to 10%). These proposed amendments were not carried.


Whilst the move towards greater transparency of UK land ownership is welcome, there remain significant gaps in the Act which, if unaddressed, may undermine its overall effectiveness and the government’s aims.

Some of the potential concerns include the following:

  • As drafted, the Act requires the disclosure of the beneficial ownership of the overseas entity in whose name UK property is registered. If the government’s aim is to reveal which individuals are the ultimate beneficial owners of UK property, then the Act does not achieve this and, surely, should reveal the ultimate beneficial owner of the property, rather than the beneficial ownership of the registered proprietor.
  • As trusts and other non-corporate bodies are not ‘overseas entities’, trusts and nominee arrangements could potentially circumvent the intention of the legislation (for example, a non-UK trust holding UK land through a nominee which it does not own or over which it does not exercise significant control would, it seem, not need to be identified as a beneficial owner). Whilst, such arrangements may be caught by a requirement to register on HMRC’s trust registration service, crucially this is not public. The interaction between these two reporting regimes is also unclear.
  • As highlighted above, one of the conditions for being a registerable beneficial owner of an overseas entity is holding 25% or more of the shareholding or voting rights. However, there is no provision for connected parties. One fairly obvious way to mitigate the disclosure of beneficial ownership would be to distribute beneficial ownership amongst a single family, for example, by reducing everyone’s respective shareholdings in the overseas entity below the 25% threshold.
  • The Act allows the government to exempt certain entities from publishing their information but it is not clear which entities can be exempted.
  • The Act lacks verification checks to deter the submission of false information.
  • Companies House may need greater powers to query, investigate and remove false information to ensure proper enforcement of the Bill. The penalties are also potentially lenient given the target demographic of the legislation.
  • The Act leaves open the door to overseas entities claiming they have no registerable beneficial owners if they have reasonable cause to believe this.
  • The register fails to capture property purchased before January 1999.

The government has committed to the rapid implementation of the measures in the Act and has promised to consider carefully the amendments put forward in the next parliamentary session as it plans for a second economic crime bill. It remains to be seen whether the most important of these concerns will be addressed.

Yousafa Hazara, Irwin Mitchell

Issue: 1568
Categories: In brief