Deadline looming for registration of Scottish property owners

Initially the transitional period under which those required had to disclose had been set at 12 months after introduction, for 01 April 2023, however the Scottish Government approved an extension in March 2023 to 24 months. Failure to register is an offence and punishable by fine.

The RCI is a legal register launched on 1 April 2022 by the Registers of Scotland. It aims to increase transparency about land ownership in Scotland by making information about those who have a controlling interest in land publicly available. The register shows who controls the decisions of owners or tenants (of long leases of more than 20 years) of land and property in Scotland registered in the ‘Property Registers’ – either the Land Registers of Scotland or Sasines.

‘Recorded persons’ (owners/tenants to Scottish property in the Property Registers) are required to enter information about those who are not registered on the title or lease but have significant influence or control over the dealing with the property, known as the ‘associates’, into the RCI.

The register is free to update and access the property ownership information such as owner, tenant and associate names, addresses, and when their relationship formed. As well as where applicable registered numbers and unique references of the owner or tenant and title and address of the property. Date of birth may also need to be provided, though these are not accessible by the public.

Certain owners/entities that are subject to other transparency regimes are not subject to the RCI. This includes examples such as some charities, UK companies, Limited Liability Partnerships (LLPs), and public bodies. As well as those owners or tenants who do not have any associates.

In 2023, the Register of Overseas Entities was introduced to provide greater transparency over the offshore entities owning property throughout the UK. Duties to the RCI are not exempted for owners or tenants who are required to register under the Register of Overseas Entities, as this is not treated as a transparency regime for the RCI.

Non-compliance with the duties to provide information in the RCI carry penalties of up to £5,000, for both owners or tenants and their associates. An RCI submission must also be made for any property caught by the RCI rules within 60 days if acquired, ownership becomes controlled or there are changes to the information submitted.

Scottish property owners may take this opportunity in dealing with their compliance for their properties to ensure that they have had their property expenditure properly analysed and optimised their tax savings. There is a wealth of property tax reliefs potentially available for those owning or investing UK property, including notably Capital Allowances on the purchase, construction, extension, fitting out and refurbishment of commercial property, furnished holidays lets (FHLs) or large-scale residential blocks where common areas, e.g. expenditure on lifts, fire safety and/or lighting may afford significant tax savings.

It is important to ensure that Capital Allowances claims are thought about at the earliest available opportunity, as there are specific allowances that generate 100% of the tax savings in the year of expenditure, known as First Year Allowances (FYAs) and Annual Investment Allowances (AIAs), rather than drip-fed over multiple accounting periods at the principal rates. These ‘accelerated’ allowances must be claimed within the ‘normal’ two-year tax reporting window as any late claims will default to the lower writing down allowances spread over time.

This new register will create better transparency around ownership of properties across Scotland, hopefully helping to resolve Capital Allowances purchase claim eligibility in a more timely manner, due to better audit trails.  Currently it can be difficult, if not impossible, to obtain the pertinent information to understand a prior owners actions - a key component of the due diligence needed in complying with the current Capital Allowances legislative requirements for claiming upon acquisition - thus potentially enabling more claims to be validated.

Capital Allowances can generate significant tax savings and more favourable cash flow following large investments, with allowances available at up to 100% expenditure, depending upon the nature and specification of the property and at varying rates of return. Other property tax reliefs include:

• Repairs and Maintenance deductions during refurbishments - available at 100% of the expenditure incurred on repairing, replacing, and maintaining assets - and
• Land Remediation Tax Relief - expenditure incurred on remediation of polluted, or long-term derelict land – available on up to 150% of any qualifying land remediation expenditure required to bring the land back into economic use.

Please contact the team on 0345 230 6450 or hello@e3consulting.co.uk with any queries or to seek our assistance with your property tax matters. We look forward to speaking with you soon.