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Consequences for ROE Non-Compliance

Published by Prerana
Posted Date: June 27, 2024 , Modified Date: June 27, 2024

Any foreign entity that conducts business activities inside the UK needs to follow the guidelines for the Registration of Overseas Entity (ROE) regime. Companies House provides support and guidance to overseas entities and their beneficial owners to ensure compliance with ROE. However, anyone failing to comply can face strict consequences.

How Does Companies House Enforce Compliance?

Overseas entities must submit information about their entity, annual updates, beneficial owners, and managing officers to the Companies House. The Registrar verifies the information and provides the entity with an Overseas Entity ID (OE ID) that can help the entity buy, sell, transfer or lease land or property in the UK.

The Companies Act 2006 was amended on 20 May 2024 by adding Section 1092A to the act that grants the Companies House the power to require a person to provide information to determine whether a person has complied with the obligation to deliver required documents to the Registrar.

Consequences for Non-Compliance with ROE

Any entity that fails to comply with the requirements, can face restrictions on properties, civil financial penalties and even prosecution for criminal activity.

  • Restriction – Companies House can restrict the overseas entity from selling, leasing or collecting charges over the land or property they own in the UK.
  • Prosecution – For serious cases of offence, Companies House may refer to The Insolvency Service or other law enforcement agencies for prosecution. After the referral, the case decision will be in the hands of the prosecuting authority rather than the Registrar.
  • Financial Penalty – The Companies House will issue a penalty notice to the overseas entity depending upon the seriousness of the offence. The financial penalty amount will depend upon the Council Tax band of the property.

Rateable Value

Property Value

Additional Rate

Up to £50,000

Low

£10,000

£50,000 to £100,000

Medium

£20,000

Over £100,000

High

£30,000

If the Council Tax band and the rateable value of the property are not available, then the penalty will be calculated according to the House Price Index Value.

Rateable Value

Property Value

Additional Rate

Up to £500,000

Low

£10,000

£500,000 to £1,000,000

Medium

£20,000

Over £1,000,000

High

£30,000

So, compliance with the regulations of ROE is a serious matter for overseas entities to conduct business transactions and more in the UK.

Conclusion

The new rules from Companies House about the registration of overseas entities in the UK stress the importance of being clear and responsible for foreign companies in the UK. Companies House wants to protect the UK property market and make sure all companies follow the law.

Companies that do not follow the rules could face restrictions on property deals, big fines, or even prosecution.  It is really important for foreign companies to do what they are supposed to do when it comes to registering and reporting. Following these rules does not just keep things legal, it also helps build trust and stability in the UK business world.

Prerana
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