How grandparents are facing more restrictions than oligarchs

Even if the oligarch does own shares in the offshore company holding the UK property, if they hold 25 per cent or less of that company’s shares nothing needs to be disclosed. Other family members may each hold shares. Provided each is individually at or below the 25 per cent threshold no one needs to be named.

In addition, the registration requirement does not come into effect until six months after the register comes into force – plenty of time for wealthy foreigners to divest themselves of their UK assets if they are publicity shy or fear having them seized.

There are other gaps in the legislation where a foreign company owns the UK house which is wholly owned by a foreign trust.

A recent case in the UK sanctions regime illustrates how leaving legislative loopholes can provide an opening for wealthy property owners to escape measures meant to catch them.

Legislation needs proper thought of all the potential consequences and absurdities.

An early target of UK sanctions over the invasion of Ukraine was Alisher Usmanov, a businessman once described as one of Vladimir Putin’s favourite oligarchs. The UK government announced in March that it was imposing (among other things) a full asset freeze on Usmanov, cutting him off from “significant UK interests including mansions worth tens of millions”.

However a spokesman for Usmanov responded that he was no longer the legal owner of most of those properties as they had been transferred into irrevocable trusts of which the beneficiaries were members of Usmanov’s family, but not Usmanov himself, the implication of this being that this would put them outside the sanctions regime.

While having a fast, strong response to a major crisis like the invasion of Ukraine is important, if the legislation is not carefully considered and painstakingly constructed it risks being ineffective. This is especially necessary with legislation, such as the Register of Overseas Entities, that is being put in place for the long term.

Legislation needs proper thought of all the potential consequences and absurdities. Timely consultation with those with expertise in these areas and knowledge of current practice makes it likelier that these shortcomings are exposed before being enacted. Rushed legislation is invariably bad legislation.

Trust issues

But while the disclosure requirements for this register are too loose, another suffers from the opposite problem. This is where the grandparents come in.

The government also operates a Trust Register. This was created in 2017 as an anti-money-laundering measure in response to an EU directive and extended in 2020 with effect from September 2022.