Alice Tait
- Senior Solicitor
Insights | Rural
Scottish Ministers extend the deadline for registration in the Register of Persons Holding a Controlled Interest in Land; are you affected?
12 May 2023
Recent legislation has seen a significant shift in the approach to property ownership in Scotland, with greater emphasis being placed on community ownership and public transparency. As part of this agenda, a key change was the introduction of the Register of Persons Holding a Controlled Interest in Land – known as the RCI – which came into force in Scotland on 1 April last year.
The RCI is designed to increase accountability and transparency in respect of who is in control of decision-making in relation to land. The Scottish Government sought to make it simpler to identify who should be contacted in connection with land or property through the register and, as such, it is available to the public and free to search. The introduction of the register also makes it more difficult for individuals or entities to hide their interests in land through complex ownership structures or nominee arrangements.
The RCI is held by Registers of Scotland and discloses who is in control of, or has significant influence over, the decisions of owners or tenants (being tenants for more than 20 years) of property in Scotland, where that information isn’t clear to the public on the existing registers – for example, on the Land Register, or the Sasine Register.
At the time of its launch in 2022, there was a one-year grace period ending on 1 April 2023 to allow those currently affected by the legislation to register in the RCI. The Scottish Ministers recently extended the grace period by a further year, to allow more time for registration, so that it now ends on 1 April 2024.
From 1 April 2024, it will be a criminal offence not to disclose a relevant interest, or to provide incorrect or misleading information in relation to an entry on the register. Failure to comply in either way can attract significant financial penalties, which are discussed below.
Who is impacted?
The Regulations define an owner or a tenant (being a tenant of a registered lease over 20 years) as a “Recorded Person”. For a Recorded Person to have to make an entry in the RCI, there must be an “Associate”, who is not the Recorded Person, but has an ability to control or direct the decision making for the property. While identifying a Recorded Person will be relatively straightforward, determining who is regarded as an Associate can be more complex. Associates can include partnerships, trusts, overseas entities, unincorporated bodies such as voluntary groups, sports clubs and associations, or other persons who have significant influence or control over the Recorded Person’s dealings with the land.
Exemptions
Where an entity would be a Recorded Person and is already required to register under another transparency regime, the Regulations provide an exemption which means they don’t need to register in the RCI. These entities include, among others, UK companies and limited liability partnerships – which are already required to report to the Register of People with Significant Control, maintained by Companies house – and charitable incorporated associations and Scottish charitable incorporated associations.
This exemption does not apply where the entity is an Associate: where an entity is an Associate registration in the RCI is still required.
Obligations on Recorded Persons & Associates
All Recorded Persons must provide Registers of Scotland with certain information in relation to an Associate within 60 days of them becoming an Associate. Individuals need to provide their name, address and date of birth (which will not be displayed publicly on the register). Any non-natural person such as an organisation or entity should provide its name, registered number (if applicable) and its registered office or contact details. Each time a property is sold or transferred or where the details of those deemed Associates changes, the RCI must be updated. A Recorded Person must notify an Associate about the registration in RCI within 7 days.
As mentioned above, existing Recorded Persons have until 1 April 2024 to report to Registers of Scotland without being subject to penalties.
There is also a duty on an Associate to inform the Recorded Person that they are an Associate, if the Recorded Person has not contacted them within 67 days of becoming an Associate. More generally, Associates are obliged to provide information upon request in connection with submissions.
Criminal Penalties
While the RCI may not apply to certain owners or tenants under other UK transparency regimes, disregarding the requirement to register, or making an incorrect submission could lead to criminal consequences. It is a criminal offence to supply incorrect information to Registers of Scotland in connection with an RCI entry or to fail to register. The penalty is a fine of up to £5,000.
Determining whether an Associate needs to be registered in the RCI is not always straightforward, especially in connection with non-transactional events such as, for example, where new partners are assumed into a partnership, or where there are changes to office bearers of a sports club who own their local premises.
To comply with RCI obligations, landowners and tenants must have a sound understanding of when registration is required and when it is necessary to seek specialist advice.
If you need assistance with RCI registration or guidance on whether you are required to take action, please get in touch with Alice Tait or your regular Anderson Strathern contact.
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