News Story: Economic crime

On 27 December 2023, the government launched  Consultation: Transparency of land ownership involving trusts. The consultation seeks views generally on how transparency about land held by trusts can be improved, as well as specific feedback on options to widen public access to trust information held on the register of overseas entities that hold UK land (ROE) created by the Economic Crime (Transparency and Enforcement) Act 2022 (ECTEA 2022) and launched by Companies House on 1 August 2022 (see FC Feature 1 August 2022 and Overseas companies/Register of overseas entities under Part 1 ECTEA 2022). The consultation closes on 21 February 2024.

Background

The consultation considers the case for improving transparency over trusts with an interest in land, with the aim of increasing public access to information about their underlying beneficial ownership. It notes that the public register of land in England and Wales maintained by HM Land Registry records only the legal owners of land and does not reflect any underlying corporate, trust or other ownership structures behind the curtain of legal ownership. In addition, the existing statutory beneficial ownership registers (the PSC register and the ROE held by Companies House and HMRC's Trust Registration Service) restrict public access to information about beneficial ownership, although this information is available to law enforcement agencies and public authorities.

The government is approaching the question of trust transparency reform in line with the following three overriding principles:

• greater transparency of land ownership where trusts are involved is a matter of public interest;
• visibility of ownership will address issues in the housing sector, for example by ensuring liability for remediation of high-rise buildings can be resolved; and
• transparency regarding land ownership will help tackle illicit finance and corruption.

The consultation focuses on information about trusts held on the ROE and considers whether the government should allow greater public access beyond the measures to enhance transparency of the ROE that will come into effect during 2024 under the Economic Crime and Corporate Transparency Act 2023 (ECCTA 2023).

Enhancing transparency of trust information on the ROE

Currently, only the details of trustees (in their capacity as registrable beneficial owners of an overseas entity) are publicly available on the ROE. Separately from the outcome of this consultation, the government intends to make regulations in the next few months under s 167 ECCTA 2023 to allow access on application to trust information held on the ROE, which is currently suppressed from public inspection. The regulations will allow applications to be made for access to information about a specific trust without the applicant having to provide evidence that there is a public or legitimate interest in the information being released. For information requests about more than one trust, applicants will be required to demonstrate they have a legitimate interest in how the information may be used. In both cases, Companies House may place restrictions on use of the information.

The government anticipates that the new application route will come into effect after a specified period, allowing individuals connected with trusts to apply to Companies House to have their personal information protected from disclosure under s 25 ECTEA 2022. This would require amendment of the Register of Overseas Entities (Delivery, Protection and Trust Services) Regulations 2022 made under s 25 (see Register of overseas entities, Q&A here). The consultation requests views on whether the grounds for granting protection from public inspection should be widened to include information about minors and vulnerable persons.

The consultation considers proposals to expand access to information about trusts held on the ROE beyond the new application route that will be introduced under ECCTA 2023. It sets out the following three options for making information about trusts on the ROE available for public inspection:

• all information will be part of the public ROE – under this option, all information would be publicly available by default, except for protected information;
• partial information will be publicly available by default – to address any real or perceived risks associated with making all information about trusts public, limited information would be included in the public ROE register, with unpublished information being accessible on application; and
• no change in public availability – the current system would remain as augmented by the new access rights created by ECCTA 2023.

The government is also interested in views on the extent to which the transparency of land held by trusts not associated with overseas entities could be improved. Chapter 3 of the consultation paper sets out five options for a future land transparency system, including the 'maximalist approach' of making all information on trusts holding land public by default.

First published on the Corporate News Service on 2 January 2024.

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