Do not be caught out by failing to comply with your obligations under the Register of Persons Holding a Controlled Interest in Land (“RCI”) legislation.
The two year grace period, during which no fines will be issued for non-compliance with the RCI legislation, will come to an end on March 31, 2024. From April 1, 2024, failure to comply with the legislation will be a criminal offence and offenders could find themselves subject to a fine of up to £5,000.
What is the RCI?
The Registers of Scotland hold records of everyone who has a title to land in Scotland (including tenants of long leases) in the Land Register and Sasines Register. However, in some circumstances the registered owner or tenant may not be the only person with control over land.
Knowing who controls or is able to influence decisions in respect of land may be vital to neighbours, developers, public authorities and a host of other parties. The Scottish Government has introduced legislation to create a new Scottish register, the RCI, in order to improve transparency in relation to control of land in Scotland. The RCI is a record of those who have the power to influence or make decisions about the management or use of land in Scotland. Any member of the public will be able to search the RCI, at no cost, to obtain contact details for those persons on the register who influence or make decisions in respect of land.
The RCI legislation creates new terminology for the relevant parties. The owner or tenant who is subject to the influence or control of another in relation to land is known as the recorded person. The person who has control or influence over the owner or tenant in relation to land is known as the associate.
The obligations under the RCI legislation are retrospective. This means that all controlled interests in land need to be registered, even if they were established prior to April 1, 2022.
Who needs to register?
The recorded person needs to make an application to the RCI to provide details of themselves, the land which they own or tenant, and their associates. Associates also have duties to provide information in some circumstances.
Identifying associates is not always straightforward. Examples where a recorded person may have to register an associate include: where an individual is subject to significant influence or control over how they deal with their land in terms of a contract or other arrangement (such as an option agreement to purchase land); where a partnership does not have their general partner noted on the registered title or lease; where a trust does not have trustees noted on the registered title or lease; where an unincorporated body (for example a sports club) does not have the persons responsible for their general control and management noted on the registered title or lease; and where someone has significant control or influence over an overseas entity in relation to the registered title or lease.
In the north east, it is likely that the RCI legislation will most widely affect trusts and partnerships that operate rural businesses.
There are exemptions to the legislation, including those entities that are already subject to transparency regimes (such as some charitable organisations, UK companies, LLPs and Scottish Limited Partnerships).
Enforcement of the RCI legislation
There are still many unknowns in relation to the RCI legislation.
Whilst the RCI has been in force since April 2022, the number of applications submitted is far less than the number that might be expected. Whether or not the general public has been made sufficiently aware of this relatively new legislation is debatable. It remains to be seen whether there will be a flurry of new entries made in the final months before the end of the grace period. But time is short, and an application can take some weeks to register.
The extent to which non-compliance will be investigated and enforced after the expiry of the grace period is currently unclear. Some offenders will inevitably be based abroad, where it can be difficult, if not impossible, to carry out enforcement action. It is unlikely with current funding constraints that additional resources will be allocated to ensure compliance.
Nonetheless, to avoid the prospect of an investigation, a criminal record and a hefty fine, those who are affected should take immediate steps to register. Your solicitor should be able to offer more detailed advice on the legislation and assist with registration.
Contact us at enquiries@raeburns.co.uk or on 01224 332400 should you wish to discuss your RCI requirements with one of our team.