Almost 13,000 offshore companies holding UK property have failed to declare their ultimate owners and may now face fines and a ban on selling their land, the government has said.
Martin Callanan, a business minister, praised the introduction of the new register of overseas owners of UK properties, saying it had been “invaluable for tax and revenue services, bringing transparency to opaque offshore trusts often used to obscure assets for tax purposes”.
Lord Callanan also highlighted its revelation that one of the FBI’s most wanted, Dr Ruja Ignatova, known as the Cryptoqueen, has been revealed as the owner of two UK properties via Guernsey companies. According to Land Registry data, these include a £1.9m property in Kensington.
However, he said only 19,510 out of a total of 32,440 registered overseas organisations have declared their beneficial owners – meaning about 40%, or almost 13,000 have not done so.
He said there would now be further investigatory powers for Companies House and the Insolvency Service and investment of up to £20m to spend tackling money laundering through companies that own UK property.
As the 31 January deadline for companies to register passed, Callanan said: “There is nowhere for the criminals and corrupt elites to hide. We will be using all the tools at our disposal, including fines and restrictions, to crack down on foreign companies who have not complied.”
He said unregistered overseas companies are now automatically rejected from registering ownership of any new land by HM Land Registry and any UK buyers will be unable to transfer their title to the deed of any property bought from non-compliant organisations.
Louise Smyth, the chief executive of Companies House, said: “We cannot be clearer in our message to these entities; if you ignored warnings and fail to register before the deadline, you will face consequences. This includes not only the prospect of restrictions on your land or property but also a possible fine, prison sentence, or both.”
About three-quarters of the companies that have registered their ultimate owners are based in five jurisdictions: the BVI, Jersey, the Isle of Man, Guernsey and Luxembourg.
Close to one in 10 of the companies (1,796) do not list an owner, and about over a third of the beneficial owners are named as companies rather than individuals, with at least 2,883 of these appearing as trust based offshore.
Of those companies that have declared a person as a beneficial owner, more than a third are British nationals, while between 3% and 4% are Cypriot, South African, US, Saudi Arabian and Chinese nationals.
The Guardian has been reporting on the ownership of some of the overseas entities as it believes there is a public interest in examining the business interests and property ownership structures of wealthy, politically connected and influential people.
Holding properties through offshore companies is legal and some individuals may have genuine and legitimate privacy or security concerns or business reasons for using them. Experts say it can be done to minimise an individual’s tax liability as the owner or buyer of a property or, until now, to allow a property to be held anonymously. Some investors also cite the stability of the tax regime in jurisdictions such as Jersey and Guernsey as a reason their companies are based there, or they may live abroad.
