UK beneficial ownership of land – Jersey TCB disclosure example case study

The issue

The ‘Register of Overseas Entities’ was introduced as part of the Economic Crime (Transparency and Enforcement) Bill (Bill 262) (“The Bill”) in the House of Commons on 1 March 2022. The bill is being fast-tracked by the UK government in response to the Russian invasion of Ukraine. This measure forms part of the UK government’s strategy to combat economic crime, seeking to level the playing field with property owned by UK companies, who already need to disclose their beneficial owners to Companies House. The proposed register would become the third register of beneficial ownership in the UK, sitting alongside the existing People with Significant Control Register (PSC) for companies and the Trust Register.

Scenario for disclosure

• Let us assume standard post Annual Tax on Enveloped Dwellings [ATED] structuring.
• A Jersey corporate trustee owns UK property as trustee of a discretionary trust.

What is reported is:

1. Corporate trustee;
2. Any protectors or enforcers of the trust;
3. Anyone with a direct or indirect influence over the corporate trustee through a chain of ownership.
• If you’re a big trust company (VC, listed etc) you are unlikely to have anyone close to the 25% threshold.
• Smaller independent trust company will have its major shareholders reported.
4. A PTC would be reported, as would the TCB at the top of the orphan structure that owns it, and then it’s owners if it’s got shareholders with more than 25%.

Just like the PSC register, it’s completely missed the point.

• You won’t find discretionary beneficiaries reported anywhere and
• You can easily structure your way out a typical Middle East style trust by using a purpose trust to hold the property with a loan instrument from the trust controlled by the settlor.