It has long been a concern in Scotland that there is a lack of transparency about the ownership of land. The Register of Persons Holding a Controlled Interest in Land (RCI) is a new register intended to improve transparency of ownership and overall control of land and buildings in Scotland. The register became operational on 1 April 2022.
Despite the connection to land, it is not a property register: it is to be a register of persons – in particular persons who, while not holding title to the land, actually influence or control decision making about the use, management or development of that land. ‘Land’ for this purpose includes buildings and other structures, land covered with water and the seabed. Tenants under long leases of land can be affected as well. Not all owners or tenants of land will be required to register and there are a number of exemptions.
Does the RCI apply to me?
The regulations establishing the new register impose duties on owners to register details about persons who may exercise control or influence over them in the RCI. Failure to comply is a criminal offence and could incur significant financial penalties of up to £5,000. The RCI seeks information about associates of recorded persons (a recorded person is the owner of the land) who are individuals, partnerships, trusts, unincorporated bodies or overseas entities. Not every recorded person will have an associate, in which case there is no duty to register in the RCI.
An associate may be a person holding a position as partner or trustee, or someone else who has the right to exercise or actually exercises significant interest or control over the recorded person’s dealings with the land. There is no detailed definition of what is meant by “significant influence” or “control” and it will often be necessary to assess particular circumstances on a case-by-case basis. However, in general, “control” refers to a situation where a person can direct the activities of another and “significant influence” is likely to apply where a person is able to ensure that another person will typically adopt their desired approach.
What details must I submit under the RCI?
Under the regulations, the principal duty is on the recorded person to notify the RCI that they have an associate (or associates – there may be more than one) and provide details. Those details include:
- the recorded person’s name and address;
- the title number or a description of the land;
- the capacity in which the recorded person holds the land; and
- the associate’s name, address and date of birth or their name, registered number, registered office and the date on which they became an associate.
The Registers of Scotland, which will also publish guidance to assist recorded persons and associates, will host the RCI. Submission will be online.
The UK Government is also introducing a Register of Overseas Entities that will apply to the whole of the UK. Although this is being introduced for a different purpose than the RCI (primarily to crack down on foreign criminals using UK property to launder money), there are overlaps in the registration requirements which are likely to lead to duplication.
What does the RCI mean for family farming businesses?
The new register is likely to be helpful in establishing who ultimately has control over land in Scotland. There are, however, some consequences that family farming businesses will have to be aware of. It is quite common for a farm to be owned, for example, by a mother and father in a family farming partnership, with the partnership involving other family members. The farm is entered as an asset of the partnership on the balance sheet, which means that although father and mother are the recorded persons according to the title deeds, they truly hold the farm in trust for the benefit of the partnership. The consequence is that the other partners are associates for the purposes of the RCI and their details will have to be recorded.