In this article, we look at how the PSC regime has so far been implemented and enforced, and how proposed changes to the legal landscape could impact the regime’s application. By way of reminder, the PSC regime requires most UK companies and LLPs to identify the individuals (PSCs) and relevant legal entities (RLEs) which have control over them, enter this information onto their PSC register and make this information publicly available at Companies House. Typically, direct ownership of more than 25 per cent, or indirect ownership of more than 50 per cent, in a company or LLP will constitute significant control for the purposes of the PSC register.
The story so far
Application of the PSC regime is not always straightforward. In fact, identifying PSCs and RLEs is often a complex process when looking at intricate group structures. A recent study by Global Witness1 has shed some light on how companies have fared so far when completing their PSC registers. While only 2.1 per cent of companies stated that they were struggling to identify a beneficial owner or collect the right information, the study also uncovered a glut of mistakes on companies’ PSC registers, with almost 9,800 listing their beneficial owner as a foreign company (and nearly 3,000 of these as companies resident in tax havens). Subject to some limited exceptions, RLEs should of course be UK entities. Additionally, and quite remarkably, 10 PSCs have their nationality listed as “Cornish”.
While some of these discrepancies will undoubtedly be as a result of inadvertent misapplication of the rules, there are clearly some deficiencies in the methods used to gather data, which could potentially allow individuals with beneficial ownership of UK companies to obscure this information. Despite a generally successful first year, various modifications to the PSC regime have been proposed in order to improve the regime’s effectiveness and ensure blanket transparency.