New disclosure rules which are now in effect could see previous financial awards granted through divorce challenged as property ownership registers become public.
The rules require British overseas territories, including the Cayman Islands, Bermuda and the British Virgin Islands, to publish company ownership registers by 31 December 2020.
Last year, the government brought in legislation to force these territories to establish registers accessible to the UK authorities, but the latest amendment requires the registers to be public.
Family and commercial property lawyers Lindsay Canning and Paul Gibbon look at the effects on the divorce and real estate markets.
Lindsey Canning says divorce lawyers are taking a keen interest in these changes.
She said: “Divorce courts are usually asked to split the matrimonial assets in whatever proportion is seen fit, therefore it is important to establish the full extent of all financial resources.
“Judges want to see evidence of the value of all assets, wherever they are.
“Previously there has been little or no chance of establishing the actual beneficial ownership if a property is owned by an offshore firm. This new amendment could allow this information to be gained and used in divorce cases.”
The Government also announced earlier this year steps to create a UK public register by 2021. This would mean an offshore company owning or buying UK property will have to enter its beneficial ownership details on a public register at Companies House.
Lindsey added: “There may even be repercussions for those who have previously denied any interest in, or involvement with, assets owned by these territories’ companies, as this information could not be verified.
“As a public register will bring to light evidence of such ownership, then it may be feasible that previous financial awards granted on divorce could be challenged, set aside and a new order made.”
Paul Gibbon said the estimated value of UK property held offshore was billions of pounds.
He said: “For privacy and tax reasons, expensive UK property is often held in offshore company structures.
“The majority is owned legitimately, but worries about criminal actions and money laundering have meant the introduction of these changes.”
Paul added: “Registration of the property transaction at the Land Registry will be withheld without a registration number. We are looking at dramatic changes to the system.”
It is expected that there will be an increase in de/re-registering of companies in the lead-in period for both measures, however the new rules will provide access to valuable information.
The rules do not currently affect Jersey, Guernsey and the Isle of Man, or offshore trusts.
For further enquiries please contact Lindsey Canning at [email protected] or Paul Gibbon at [email protected]
