Source: https://www.gov.scot/publications/delivering-improved-transparency-land-ownership-scotland-consultation-analysis-report/pages/4/
Timestamp: 2019-11-17 17:11:24
Document Index: 780275833

Matched Legal Cases: ['art 1', 'art 3', 'art 2', 'art 4', 'art 1', 'art 5']

3.1 This chapter presents analysis of responses to the first eleven consultation questions. Questions one and two concern the form of the Register, questions three to six address duties to provide information and questions seven to eleven concern miscellaneous aspects of the Register.
Part 1 and 2 – The Form of The Register
Responses to Question One: The form of the Register
3.2 A quantitative summary of responses to question one is provided below:
1: Do you have comments on our proposals for the form of the Register?
Views on the proposed Register
3.3 Many participants expressed their overall views on the new Register in their response to the first question; some discussed specific aspects of the regulations that were covered elsewhere in the consultation document. These detailed responses are presented under the relevant question heading in this report to avoid duplication.
3.4 The overall views expressed in responses to question one are summarised below:
Three participants suggested that greater transparency would have positive impacts in relation to communities' abilities to take advantage of opportunities such Right to Buy. Within these responses:
They suggested they did not foresee any negative commercial impacts from the greater transparency of data that will be afforded by the new Register.
They noted the new Register could aid understanding of the total land holdings of individuals and recommended that all of the data within the Register be publicly accessible as open data, following the format of the Register of people with significant control (PSC), for that reason.
It was highlighted that greater transparency would have positive impacts in relation to driving down abuse of corporate vehicles for the purposes of corruption, organised crime and tax evasion.
One praised the intention to make use of the Register free.
Four participants made the case for incorporation of new information within existing registers, rather than the creation of a new one. Within these responses three cited complications such as duplication of existing information, transparency and accessibility. One described a perception that the creation of a new Register would be an undue burden on the Registers of Scotland.
Another participant echoed the comments made by others in relation to information, transparency and accessibility but said they accepted the Scottish Government's rationale for the creation for a new Register.
One participant questioned the need for a new Register, expressing view that existing information about owners and controllers on the Companies House Register of Persons of Significant Control is sufficient for the purposes of transparency about land ownership in Scotland.
3.5 One participant asked for the Register to be called the Register of Controlling Interests in Land, noting a subtle difference between the terms 'controlling' and 'controlled'. They suggested that the Land Register of Scotland already provides details of controlled interests. Another suggested the creation of a new Register should be established, maintained and enforced at an appropriate cost.
Details about recorded persons and associates
3.6 There were different responses to the personal information to be gathered in the new Register from four participants. Three described their satisfaction with the level of detail proposed; for example, they highlighted that the PSC Register meets GDPR requirements and the UK Government did not consider any of the information to be disclosed to constitute personal sensitive data under the Data Protection Act 1988 or the European Convention on Human Rights. However, concerns about the proposed personal information to be gathered were expressed by one participant who suggested it amounted to an infringement of the right to privacy.
3.7 Four participants suggested more detail about associates would assist anyone searching the Register to identify records that refer to the same individual. They advocated for the allocation of a unique identifying number for each person when they are first entered into the Register.
3.8 Calls for more details within the Register about the status of information about associates came from three participants. They highlighted a number of different conclusions that might be reached if no registered associate(s) was listed in the Register, for example (i) there not being any associates (ii) because the information has not yet been provided or (iii) because the associate is subject to a Security Declaration.
3.9 In comments on the information to be recorded for associates covered by Schedule 2, another participant raised the issue of duplication mentioned at 3.5 above, namely that they felt the Land Register of Scotland already provides details of controlled interests. They suggested that anything other than name and registered number for an associate would be available on the relevant register.
3.10 Three participants reflected on ways to search the new Register. Two suggested it was unclear if historical searches of the Register would be possible, for example if someone wished to identify recorded persons and associates previously connected to the land. Another suggested there should be multiple ways of searching, above and beyond using the Land Registry Number, but did not explain any potential shortfalls of relying on a Land Registry Number.
3.11 One participant expressed concern about the widespread nature of the changes. They suggested these duties may affect a wide range of individuals and bodies and noted that the present lack of detail about trust or partnership ownership means it is not possible to estimate how many will be affected by the new Regulations. Conversely, another three participants highlighted as positive that the new Register covers all types of legal entities and non-natural persons; that it will apply to land owners and long-term leaseholders and cover all land in Scotland. They described this approach as more far-reaching than proposals from the UK Government; particularly the public disclosure of who controls various forms of trusts.
3.12 Aspects of the draft proposal that would benefit from further clarification were identified by some participants. Two participants highlighted that, given the sanctions associated with non-compliance, precise language is of paramount importance. Areas of potential confusion are described in more detail below.
There were comments about the details provided in relation to exclusions. Two participants suggested that the decision to exclude entities from the Register which are already subject to other transparency regimes would make it difficult for the general public to identify who controls Scotland's land. Another said it is not clear that individuals who own or rent their homes are not within the scope. Two participants suggested the list of exclusions might be extensive. In this discussion, one of these participants described potential difficulties in identifying associates in unincorporated bodies without formal constitutions and called for the proposals to offer suggestions and solutions.
Potential confusion was also identified in relation to the terms 'control' and 'significant influence'. For example, two participants described in detail a range of potential differences in interpretation that could arise. They suggested the Explanatory Document should expand on the types of circumstances in which 'control' or 'significant influence' exists or will arise and give examples of what 'control' and 'significant influence' means in practice.
One participant suggested the use of the term 'recorded person' changed within the Explanatory Document; in one instance 'owners or tenants' are referenced, in another 'each person recorded in the RCI', which could be taken to include associates.
Another felt the list of those who have contractual or other arrangements with an individual might be extensive and that the draft proposals do not currently reflect all eventualities.
One participant also asked for clarification within the draft regulations as to how overseas entities are to be included in the current arrangements.
One highlighted that there should be a clear exclusion for those holding the role of the 'trusted advisor' in a paid professional capacity and said they did not think it appropriate for solicitors to require to certify those who hold a controlling interest.
Another called for a new consultation on the revised Regulations once the ambiguities had been resolved.
Responses to Question Two: the role of the Keeper
3.13 A quantitative summary of responses to question two is provided below:
2: Do you have comments on our proposals for the role of the Keeper in relation to information in the Register?
3.14 Over half of the consultation participants responded to question two (thirteen out of nineteen). One of these participants simply replied 'no', interpreted with reference to this question to mean 'no – I do not have any comments on the proposals for the role of the Keeper in relation to information in the Register'.
3.15 The most common point made in relation to the Keeper concerned the need for additional resources to be provided to the Registers of Scotland to accommodate the new activity associated with the regulations. Eight participants made similar comments on this matter; in which many highlighted the already significant workload faced by the Registers of Scotland. A sufficient level of resources was also highlighted as crucial for ensuring the accuracy of the Registers.
3.16 Accessing information in the Register was another repeated theme in comments, referenced by four participants.
3.17 Three participants referenced Scotland Land Information service (ScotLIS) in their responses, asking whether the intention was for the RCI to be accessed in the same way; one of these explicitly suggested that it should be accessed in the same way.
3.18 Two highlighted that access to the Register is described in the draft regulations as 'at the discretion of the Keeper' and called for more clarification about this on the basis that those providing information will want to know who can access it and for what purpose. They also called for more detail about the way in which information will be made available in the explanatory document.
3.19 One advocated for a dual access system, with public access to information that there is a controlling interest, but a further step for anyone wishing to view personal information such as contact details. Another participant suggested that a new Register was not necessary and described steps through which members of the public could access information if the new information sought from landowners were to be incorporated within existing registers.
3.20 Four participants suggested that the Regulations should provide that anyone who suffers loss or damage as a result of a security breach must be compensated. Two of these highlighted the need for compensation in the case of any acts or omissions by the Keeper or staff which lead to criminal sanctions being imposed on the recorded persons.
3.21 A need for specific timescales for any entries or amendments to the Register by the Keeper was mentioned by four participants. They typically suggested the introduction of a sixty-day limit, mirroring the requirement for those submitting information to the Register. One suggested the Register should contain details of the date on which information was last updated, to signify the point at which it was last accurate.
3.22 Robust security measures to protect the information held in the new Register were called for by three participants. They suggested this should be done to a recognised independent standard, not simply in a way that 'appears reasonable to the Keeper', as currently stated in the draft regulations.
3.23 Two participants called for strengthening the regulations in relation to establishing a process of systematic checks to support data validation and verification.
Part 3 – Duties to Provide Information
Responses to Question Three: Information to be provided in the Register
3.24 A quantitative summary of responses to question three is provided below:
3: Do you consider the information we are requiring to be provided for inclusion in the Register sufficient and proportionate?
3.25 Around three quarters of the consultation participants (fourteen out of nineteen) responded to question three. A small number of these (four participants) made short responses to state their views on the duties to provide information were expressed in responses to other consultation questions; these are covered elsewhere in this report in the relevant section. One suggested they could not answer this on the basis that felt the regulations are currently not clearly drafted. Five participants made no comment whatsoever.
3.26 Views among those who responded to this question were mixed. Just under half of those who made a substantive comment (four participants) expressed agreement that the information is sufficient. However, one of these suggested the requirement to provide information that is already in the property register could be considered disproportionate and result in duplication. They proposed some simple administrative changes that would make the links between the Land Register and RCI easy to identify; these have been signposted to the Scottish Government for consideration. This participant also felt that the guidance about who is excluded from the requirements could be clearer.
3.27 Six participants voiced concern about the level of data gathered. For example, four participants suggested the level of personal information sought is too extensive; of these, one suggested that personal addresses could be used for malicious purposes and asked for business addresses to be recorded instead; three questioned the need to gather information about a person's home address or date of birth. Two highlighted that unwillingness to share personal information might have an adverse business impact by discouraging land ownership in Scotland from overseas investors who do not wish for this information to be made public.
3.28 One participant suggested that Schedule 2 entities should simply require information about the name and registered number (if appropriate) and called for it to be made more explicit that Schedule 2 entities do not need to provide additional information.
3.29 Another anticipated a problem with keeping details about listed entity with public shareholders up-to-date.
Responses to Question Four: Duties to provide information
3.30 A quantitative summary of responses to question four is provided below:
4: Are our proposals for the duties people will be under to provide information sufficient and proportionate?
3.31 Around three quarters the consultation participants (fourteen out of nineteen) provided a response to question four. A small number of these (three participants) said their views on the duties to provide information were expressed in responses to other consultation questions; one simply stated they had no comment to make and another suggested they could not answer this on the basis that felt the regulations are currently not clearly drafted. Five participants did not respond to the question.
3.32 Views among those who responded to question four were mixed. A third of those who provided a substantive response to the question (three out of nine participants) expressed agreement with the proposed duties; these responses were short, for example simply 'yes', interpreted with reference to this question to mean 'yes - proposals for the duties people will be under to provide for inclusion are sufficient and proportionate'.
3.33 Other responses are summarised below:
Three called for greater simplicity in guidance and forms.
Two suggested the duties are onerous.
Three expressed concerns there will be inadvertent breaches and noted this will require significant efforts to raise awareness and understanding among the public.
One called for the obligation for a recorded person to notify an associate within seven days of serving a notice on the Keeper about an associate be replaced with an obligation on the Keeper to send a copy of the notice received to the associate.
3.34 Reiterating a point made in previous responses, one highlighted that the guidance should make clear who is excluded from the requirements.
3.35 One participant asked for clarity about the obligation to take 'reasonable steps' to verify the accuracy of the associate's required details. They also suggested that the period of sixty days to provide the information is too short.
Responses to Question Five: Process for security declarations
3.36 A quantitative summary of responses to question five is provided below:
5: Is our proposed process for security declarations reasonable?
3.37 Over half of the consultation participants (thirteen out of nineteen) provided a response to question five; however, one of these participants simply said they had no comment to make.
3.38 Views among those who responded to question five were mixed. Roughly half of those who provided a substantive response to the question (six out of twelve participants) expressed agreement with the proposed duties. Three of those in agreement called for small amendments which they suggested would minimise possibilities of abuse of the system; these were (1) publication of an annual report on the reasons for and number of security declarations granted, plus (2) for any requests for anonymity to be forwarded to relevant law enforcement bodies.
3.39 Three participants commented on the role and experience of the Keeper in relation to security declarations, calling for comprehensive training and guidance to be given to those involved in any decision making. Another questioned whether this was the right way to make the decision, suggesting that it might be a more appropriate role for Companies House to perform.
3.40 Two participants made detailed comments on the process for making a security declaration. They made suggestions about the form, guidance and appeals which have been signposted to the Scottish Government for consideration and asked that opportunities for making a security declaration be prioritised in the process of making an entry in the Register. One of these suggested that the default position should be to assume that a security declaration would be applied for, with information treated as confidential until it had been confirmed that this would not be required. The other identified potential gaps in the process where details may be publicly available on the Register, before that individual has had the opportunity to make a security declaration to the Keeper.
3.41 A small number commented on the level of disclosure required. One suggested that the level of detail called for could be detrimental for businesses, for example by making it possible to identify assets. They also highlighted concerns about data security and identity theft. Another suggested there was imbalance in the Regulations between what a vulnerable person is required to show to support a security declaration.
3.42 One called for anyone making a security declaration to be able to apply for an extension of time if required.
Responses to Question Six: Barriers to applying for information not to be disclosed
3.43 A quantitative summary of responses to question six is provided below:
6: Are there people you think should be able to apply for their information not to be disclosed in the Register, who may not be able to under our current proposals?
3.44 Over half of the consultation participants (twelve out of nineteen) provided a response to question six, however three simply stated that they had no comment to make.
3.45 Views among those who responded to this question were mixed. Half of those who provided substantive responses (five out of nine participants) indicated they were satisfied that the current proposals did not exclude any people who may wish to apply for their information not to be disclosed; however, one of these suggested the Scottish Government might undertake some specific consultation with those who may wish for their information not to be disclosed.
3.46 Of the remaining four participants that responded to this question:
One reiterated a view they had expressed in responses to other questions that the commercial sensitivity of the information sought may inhibit some commercial entities from investing in property.
One provided a detailed explanation of why they believed their organisation should be exempt from providing the information sought, for example describing a diffuse Trustee structure which encompasses a large number of individuals. They noted that they are required by law to provide copy of latest accounts to any enquirers. These include Trustee's names, and on that basis they consider their organisation subject to an alternative transparency system.
Another reiterated a view they had expressed in responses to previous questions that the list of those exempt from the Regulations should be clearer. They expressed a view that Part 2 of Schedule 1 will require an owner to consult the Register of People with Significant Control regulations to establish if they are required to comply or not. This participant also suggested that only corporate contact details should be collected.
One suggested that to protect the privacy of individuals, anyone seeking access to information at this level should have to provide a reasonable rationale for their enquiry.
Responses to Question Seven: proposals for referral of questions about the accuracy of the Register
3.47 A quantitative summary of responses to question seven is provided below:
7: Do you have any comments on our proposals for referral of questions about the accuracy of the Register to the Lands Tribunal?
3.48 Eight of the nineteen participants are judged to have given a substantive response to this question. Nine left the question blank. Two replied 'No Comment' and one said 'No' (interpreted in this context to mean 'no – I do not have any comments on the proposals for referral of questions about the accuracy of the Register to the Lands Tribunal).
Minimise the exploitation of loopholes
3.49 Two participants said they did not wish for the range of people who could apply for exemptions to disclosure to be expanded, as this may increase the risk of exemptions being exploited by those wishing to avoid the disclosure requirements.
3.50 One participant suggested that the complexity of verifying the accuracy of the Register would have resource implications for the Lands Tribunal.
3.51 One participant questioned the expertise of the Lands Tribunal to address questions on the accuracy of the Controlled Interests information. They point out that such information will not relate to the land, but to the arrangements for holding and dealing with that land and this may involve complex trust or corporate arrangements. The participant suggested this may be beyond the expertise of the Lands Tribunal.
3.52 In contrast, one response suggested that the proposal was reasonable, given the existing jurisdiction of the Lands Tribunal to hear appeals against the Keeper arising out of matters relating to the registration of title to land.
Possible vexatious complaints
3.53 One participant expressed concern in relation to regulation 17 in Part 4, explaining that the reference to 'a person' at 17(1) allows anyone to make a referral. They fear this has a potential to lead to 'vexatious complaints'.
Access to justice and speed
3.54 One participant argued that the referral process and the costs involved must not impede access to justice. Another argued that a simple procedure should be established in order that, when required, rectification of the Register can be dealt with swiftly.
Responses to Question Eight: Do you have any comments on our proposals for criminal offences?
3.55 A quantitative summary of responses to question eight is provided below:
8: Do you have any comments on our proposals for criminal offences?
3.56 Fourteen of the nineteen participants are judged to have given a substantive response to this question. Five did not respond to the question.
3.57 A majority of participants (ten of thirteen) expressed some form of concern over these proposals.
Concern about disproportionate measures
3.58 One argued that many individuals to whom these Regulations apply will fail to comply inadvertently.
3.59 Another supported this and suggested that deliberate acts of fraud or negligence would be caught by existing legislative measures such as through Companies House or Anti-Money Laundering/Proceeds of Crime legislation. They felt it is likely that most 'offences' under the proposed Regulation will be committed unintentionally, by people with nothing to conceal.
3.60 Another said they do not support criminal sanctions for non-compliance with the regulations. They had concerns, that without sufficiently rigorous promotion of the new Regulations, there may be many owners and associates who inadvertently fail to comply with the Regulations and will find themselves committing a criminal offence. They suggest that the scale of inadvertent non-compliance will be significant. Criminalisation of persons due to their lack of awareness of the requirements was said to be disproportionate.
Preparation time, grace period and responsibility.
3.61 Others commented on ways to make the system work fairly. These included steps to ensure relevant people have adequate time to adjust to the new measures and are clear about responsibilities under the new arrangements.
3.62 One argued that it is essential that all of the requirements of the Regulations are well publicised, to ensure that those on whom the duties fall are aware of them. They also called for help and support to be made available for property owners or tenants. For example, in the case of religious bodies where title to church buildings may have been vested in a number of ex officio bearers for a century or more, it is likely that the current holders of these offices will be unaware of the fact that by virtue of their office they hold title and thus fall within the definition of recorded person or associate in the Regulations.
3.63 Another said that account should be taken of mitigating circumstances in situations where the regulations are not complied with inadvertently. One participant recommended it should be a requirement that before an offence is deemed to have been committed, the person concerned is given a period of time to comply with the duties that attract a penalty under the Regulations.
3.64 Another noted that the proposed transitional period under the UK Registration of Overseas Entities Bill is eighteen months. They suggested the proposed transitional period of six months is not long enough given the number of people likely to be affected by the Regulations.
3.65 One participant argued that with the scope of the Regulations and a short transitional period, it would be harsh for failure to comply to carry a criminal penalty. They suggest there will be a need for a national advertising campaign, across all media, explaining in simple terms who will be required to register and how. Another said the Scottish Government must ensure that there is visible and sustained publicity to highlight the requirements of this Register if multiple breaches of the Regulations, through ignorance of their existence, are to be avoided.
3.66 A few participants identified aspects of the regulations which might give rise to confusion. One said it was not clear about who the term 'manager' refers to in Regulation 20(3). In the same Regulation they argued that those covered under the 'other body or association' definition should be limited to those holding an office or management role through which they are a controlling mind of the organisation. Another noted some uncertainty in the application of Part 1 of Schedule 1, believing it would be inappropriate to make it a criminal offence to fail to disclose information if it is not absolutely clear to whom and to what 'contractual or other arrangements' the regulations apply.
Need for enforcement and stronger deterrent needed
3.67 In contrast to the views expressed above, four participants suggested stronger deterrents were needed. One argued that for the system to work it must be enforced. Three others suggested that the penalties envisaged were insufficient to act as a deterrent for non-compliance. They pointed out that the offences envisaged will be subject to a maximum penalty of up £5,000, a sum they do not consider to be sufficient to deter those seeking anonymity.
3.68 Within these responses were reference to the equivalent offences as set out in the UK's proposed regulations for the Registration of Overseas Entities. The offences as set out for failing to comply with these duties are: imprisonment for up to two years or a fine (or both) for a conviction on indictment; and on summary conviction in Scotland, imprisonment for up to twelve months or a fine up to the statutory maximum £10,000.
Responses to Question Nine: Are there alternative or additional means of enforcement that we should be considering?
3.69 A quantitative summary of responses to question nine is provided below:
9: Are there alternative or additional means of enforcement that we should be considering?
3.70 Nine of the nineteen participants are judged to have given a substantive response to this question. Nine left the question blank and one replied 'No Comment'.
3.71 Two participants noted that such an enforcement mechanism is already proposed by the UK's new Draft Registration of Overseas Entities Bill. This will require any foreign entity who wants to buy land in Scotland to have already registered their beneficial ownership with this new Register at Companies House. They recommend that completion of the Register for recorded persons and associates should be introduced as a pre-condition for undertaking other administrative and financial changes and / or transactions relating to the land.
3.72 In contrast, one participant was pleased to see that compliance would not be made a pre-condition of land registration. They pointed out that the legal right to land is only made real on registration any delay in the registration process could have had serious consequences for purchasers of property in Scotland
Civil penalties and Justice
3.73 Several participants reiterated points made in Question 8. One said they considered civil penalties to be more appropriate than criminal penalties. Another argued that an offence should only be committed, and a fine payable, where someone delays or refuses to provide the required information within a reasonable period after having been asked to do so by the Keeper.
Responses to Question Ten: Do you have any comments on our proposed process for notification of the Keeper in the case of a person's death or an entity's winding up or dissolution?
3.74 A quantitative summary of responses to question ten is provided below:
10: Do you have any comments on our proposed process for notification of the Keeper in the case of a person's death or an entity's winding up or dissolution?
3.75 Seven of the nineteen participants are judged to have given a substantive response to this question. Nine left the question blank. Three replied 'No Comment' and one said 'No' (interpreted in this context to mean 'no – I do not have any comments on the proposed process for notification of the Keeper in the case of a person's death or an entity's winding up or dissolution).
3.76 The responses typically focused on the complexity of these measures.
Complex and onerous
3.77 One participant had a concern that the failure of an executor to notify the Keeper of the death of an individual who is a recorded person or an associate is to be a criminal offence. Two pointed out that the executor may have no knowledge of the existence of the deceased's details on the Register. They also noted that those affected by this provision may involve overseas entities and suggested it raises the question of enforceability of the sanctions. Another had a concern regarding regulation 21, arguing it can take months to obtain confirmation and for the transfer of a property to take place.
3.78 Another considered this duty to be onerous, especially in situations where those responsible for making the notification might be unaware of the requirements and may not have the benefit of professional advice.
3.79 One participant said this proposal needs to be reviewed to ensure it deals sensitively with the position of a bereaved spouse acting as executor, for whom it would seem extremely harsh to be found guilty of a criminal offence at such a time because they were unaware of their spouse's role as 'associate'. Another participant considered this measure may prove oppressive in practice.
Part 5 – Application and Transitional Provisions
Responses to Question Eleven. Do you have any comments on our proposals for a transitional implementation?
3.80 A quantitative summary of responses to question eleven is provided below:
11: Do you have any comments on our proposals for a transitional implementation?
3.81 Fifteen of the nineteen participants are judged to have given a substantive response to this question. Four left the question blank.
3.82 Several participants argued that the transitional period of six months is too short. One noted that, in the case of properties which may not have changed hands for a generation, people will have no reason to be alert for this change. In their discussion they expressed a view that a more proportionate implementation proposal would be that the obligation to record the required information would only be triggered by defined dealings with the land. They suggested his could be backed up by a 'longstop' implementation date, within which the obligation would apply regardless of whether or not a trigger event had occurred.
3.83 Others reference the proposed transitional period under the UK Registration of Overseas Entities Bill as 18 months and saw this as a more realistic timescale. One participant had a concern that it may take some charities longer than six months to establish which individuals are required to register, citing village halls as a prime example. They were concerned about the awareness and understanding of this issue among the charitable sector.
3.84 Two participants reiterated the importance for owners and tenants in land, and their associates, to be made aware of the Regulations in order to meet the requirements. One argued that the proposed transitional period will depend on Registers of Scotland having sufficient capacity to receive and process the needed data.
3.85 Four participants indicated they found the proposals reasonable.