What was the recent EU ruling to the beneficial ownership register?
In November 2022, the Court of Justice for European Union (CJEU) made a pivotal decision that altered the landscape of beneficial ownership registers in Europe. With this landmark ruling, members of the public were no longer granted access to beneficial ownership register database. While this decision has left some questioning the implications for transparency and accountability, the United Kingdom stands firm in its approach.
Despite the CJEU's move, there are no indications that the UK will follow suit and revoke public access to its trust register, persons with significant control register ("PSC Register") or the register of overseas entities ("ROE").
In this article Tracey Neuman, Private Client Executive, explores what specific information remains accessible to the public and under which circumstances.
For UK Trustees, what information is publicly available under the beneficial ownership registers?
ROE
The ROE contains details of the registrable beneficial owners of non-UK entities which are the registered owners of UK real estate. The register is easily accessible via Companies House.
Details of the trust would be provided where the trustees are a registrable beneficial owner of the non-UK entity. The names, date of birth and address of beneficiaries needs to be provided as part of the information about the trust. However, the law specifically provides that the information about the trust is not publicly available, although the existence of the trust is noted on the register. Companies House will share the information on the trust with HMRC, but not with the general public.
PSC Register
As with the ROE, the PSC Register for all UK companies is available from Companies House. The PSC Register would only be relevant if the trust owned a UK company. If it did, the register would contain details of any person able to exercise significant control over the company.
Whilst the law for the ROE was based on that for the PSC Register, there is no requirement to provide details of the trust where a trustee exercises significant control over the company. As a result, details of the beneficiaries would only be publicly available if a particular beneficiary exercised control over the company directly or by virtue of exercising control over the trust, for example anyone with the power to hire and fire the trustees.
Trust Register
It is less easy to access information on the trust register, but it is possible by making a trust data request to HMRC. The making of a trust data request does not necessarily guarantee that information will be made available. As a starting point, not all trusts are registered. The majority of UK express trusts are registered (or should be). Non-UK trusts only need to be registered in three circumstances; a) where they have a liability to UK tax on UK assets; b) where they have acquired a UK property on or after 6 October 2020; or c) one of the trustees is UK resident and a new UK business relationship is entered into on or after 6 October 2020.
HMRC will not provide information on all registered trusts. Some are protected from information disclosure. These are broadly a) trusts that would not otherwise be registrable, other than the fact that they have a liability to UK taxation or b) non-UK trusts, with no UK resident trustees, that are only registrable because they acquired UK land. In the case of the non-UK trust in many cases, a liability to UK tax will arise in the future, which would remove the protection. HMRC will also not share information on minors, those lacking mental capacity or anyone at risk of kidnap, extortion or violence by virtue of sharing the information.
If the trust is registered and is not exempt from information disclosure, the person making the trust data request is still required to provide sufficient detail of the trust to allow it to be identified. Such detail would include, amongst other things, the name of the trust, its UTR and contact details for any persons connected with the trust. This in itself would be a reasonably high hurdle, as many trusts have the same name and certain persons could be connected to multiple trusts.
Assuming all of the above hurdles are met, there is one further hurdle for disclosure and that is the demonstration of a "legitimate interest" in obtaining the information. A "legitimate interest" arises if someone is investigating a suspicion of money laundering or terrorist financing. It is not enough to simply state that you have a suspicion, you have to be able to demonstrate the reason for your suspicion.
The final hurdle does not apply where the trust holds a controlling interest (more than 50%) in a non-EU entity. For these purposes the definition of EU is extended to include Norway, Iceland and Liechtenstein. Whilst the additional protection is not applied, it is unlikely that there will be many registered trusts that would satisfy the criteria, simply because most trusts in these circumstances would not need to be registered.
As a result of the hurdles applied to trust data requests, it would be unlikely that many beneficiaries would have their information disclosed.
What's the conclusion?
Whilst it is possible to obtain information about trusts from the trust register, it is unlikely that many beneficiaries will have their details shared with members of the public. The risk of the existence of the trust becoming known can be limited by using non-UK trusts that do not directly hold UK assets (i.e. any UK assets are held by a non-UK holding company). In those circumstances, there would be no need to register the trust.
If the non-UK holding company owned UK real estate the existence of the trust would be noted on the ROE. Only the registrable beneficial owners appear on the public register, and they would be limited to the trustees and anyone with the ability to exercise control over the trust, for example a protector. If the offshore trustees are the trustees of many trusts, this would further limit any disclosure risk.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.