The business had received a £50,000 penalty from Companies House for alleged non-compliance with Register of Overseas Entities (ROE) registration requirements.
Under the new rules, overseas entities buying, selling or transferring property or land in the UK must register with Companies House. Trainee solicitor Annabelle Cowie wrote a blog post about the ROE around this time last year.
The legal issue
Companies House may issue a penalty if it is satisfied a party has failed to comply with its obligations under the regulations to register with the ROE.
Our client did not receive a penalty warning notice which Companies House claimed it had issued in November 2023. Instead, our client learnt of its alleged non-compliance by receipt of a penalty notice on 3 February 2024.
In terms of the regulations, the registrar of Companies House has the power to issue a penalty notice if it is satisfied there is conduct which amounts to an offence, but only “after the end of the period stated in the warning notice”.
Application for leave to appeal the penalty notice
As one of our solicitor advocates Jane Rattray holds extended rights of audience to appear in the Court of Session as well as the UK Supreme Court.
As our client was not given advance notice from Companies House that a penalty would be issued, it sought an order from the Inner House of the Court of Session to overturn the registrar’s decision to issue a penalty on the basis the notice period did not start and could not therefore have expired.
It was argued Companies House’s decision to issue the penalty notice was unreasonable, made on the basis of procedural impropriety, premature and unlawful.
The outcome
After lodging the appeal, on a without liability basis, Companies House agreed to revoke the penalty and contribute toward the client’s costs of preparing and lodging the appeal. It also undertook to send future notifications to a different email and UK postal address to avoid similar issues in future.
This case highlights the powerful effect a swift and well-prepared appeal can have in protecting clients’ financial interests.