 Welcome to the 21st meeting of 2018 of the Environment, Climate Change and Land Reform Committee. Before we move to the first item in gender, I want to remind everyone present to switch off mobile phones and other electronic devices as these may affect the broadcast system. The first item on the agenda is for the committee to consider whether to take items 4, 5, 6 and 7 in private. Are we all agreed? We are agreed. Thank you. The second item of business on our agenda today is to hear evidence from Scottish Government officials on the proposed draft regulations to establish a register of persons holding a controlling interest in land. May I welcome Keith Connell, Pauline Davidson, Andrew Ruckston and Graham Watson. Good morning to you all. We'll just get straight into questions. Finlay Carson. My first questions are fairly straightforward based on what information is contained in the register. Can I ask you what the process was followed on deciding what information was going to be included in the register and also give us an idea of maybe what information was considered but discounted? So an example might be the nationality of the person being recorded. That one. Regulation 3 provides that in respect of an owner or tenant, we're looking to register their name and address and the capacity in which the owner will enter on to the register. It should also disclose information about the relevant piece of land, so that might be a land register title number or where there isn't such a title number, a description sufficient for it to be identified. The intention with the inclusion of the information about the owner or tenant and about the land is to provide the link back to the land register, which is the chief source of information about legal owners of land in Scotland. Just to give that reassurance to people who are looking to use the register and the information in it that the information is relevant to the piece of land that they are interested in. What is the address of the person concerned? Is that their address or is there any risk of it simply being the address of a solicitor's office or a holding company? In terms of the recorded person, it would usually be their address if they are using a solicitor's office. It should be one that they are genuinely contactable by and that the correspondence would reach them. Was there any other information that you looked at, potentially including in the register, but discounted it? We proposed to be included and we think that it is sufficient to give that link. We did consider whether our nationality would be necessary to support that and we felt that that additional information was not required. Of course, the land register does give some information about nationality, for example, of overseas legal entities that own land in Scotland. It would show where their country of origin was. It was just to add to what Graeme McLean was saying. I think that the key focus is to enable people and communities to contact individuals who might have control over decision making in that piece of land. We considered what information was required to be registered in order to enable that. That was the rationale between having that information. Just on that, nowadays, snail mail, whatever you call it, is not used particularly often. Why haven't we got information such as email address or web address or telephone numbers included in the register? We proposed that an address be provided rather than the email address or phone number. As we considered, that would give more reassurance to the person looking to engage with, in this case, the owner or tenant. However, the same rationale applies down the line to the people who are holding a controlling interest. It is a physical address and it is provided to be one at which they can be contacted. It is in use. It is not a victim to spam filters or anything like that that you would get with an email address. Sure, let us slow down the ability for someone to contact that land owner. Email is now the default method of communication in so many cases. Could it not have been included along with the geographical address? In that case, we have prioritised that level of reassurance, but we will be looking quite closely to see what comes out of the consultation. Obviously, it is very important to the policy goal that the information is usable and that it supports that engagement. We are looking to pick up points on that if they are raised in the consultation. You suggested that the register is a way to link back to actuate the land records and practice how will the relationship between the keeper and the lands tribunal operate? There are too many areas of involvement for the lands tribunal in the proposed register. They will consider appeals made against decisions of the keeper to reject a security declaration and they will consider questions referred to them about the accuracy of the register. That potential for referral of questions about accuracy is intended to be a backstop where the question is too complex to otherwise be resolved or would require the creation of a new entry in the register. We have discussed with the keeper the role that she will be playing and had her views on that. We will continue those discussions to support the functioning and operation of the register. During the discussions, have you discussed first of all how many cases can you predict or guesstimate that there might be between the keeper and the tribunal? Do you have any idea how the time process would be to deal with those inquiries? The lands tribunal considers questions about the accuracy of the existing land register. That gives us something of a baseline, although the drivers for referring the questions would be quite different. They have given opinions on almost around 10 referrals, I think, about questions about accuracy since 2015. I think that that is correct. We would expect a similar, relatively low level of referrals. As I mentioned, it should be a backstop and hopefully not the first point of recourse for ensuring the accuracy of the register. How long has it taken to resolve those 10 referrals? The lands tribunal has a number of cases that we would have to consider at a time, so we are mindful that there is a burden on them. We are still in the early stages of discussing with them the operation of the referral function, but we are mindful that that shouldn't be an overly long process. Just looking at the UK legislation, persons with significant control register, I note that the details that are required to provide there are name, date of birth, nationality, country of residence, service address, usual residential address, brackets are not displayed to the public, and then one or two other things. There are some things on that list like the usual residential address that we are not seeking to include in Scotland. Why, when it was decided to the person's significant control register that they should be included, as is basically the case in the company's house register for companies, why have we decided to exclude them, since that is existing practice? It comes back to the difference in purposes, as we understand them, between the register that we are proposing here and the existing PSC register. The PSC register is focused on addressing or countering money laundering or corruption and has a very active law enforcement involvement there, and that is why they have required extra information such as the usual residential address and, in fact, the full date of birth, even though the actual date itself is not included in the register. The additional details that we have not included in the nationality and the usual country of residence, again, that speaks back to the point on what information we considered to be sufficient to enable people to engage with those who have controlling interests or control of decision making. We consider that we have done that with their name and address, or contact address, the month and year of birth teller to distinguish between individuals. So you are not making the distinction that is clearly being made in the person's significant control register between the use that members of the public might make of it and the use that enforcement agencies such as those who have oversight in the financial services industry, where there is information clearly being sought and retained related to that but not published. You are not making that same distinction. Was it something that you considered making that same distinction that is clearly being made elsewhere? I will pass on to Andrew McLean in just a second, but it comes back to the different functions that are looking to fulfil. I think that that is right. At this stage, I mean that this is an early stage obviously in these regulations, but I think that, as Graeme said, this is coming back to what the regulations are trying to do as compared to what the persons of significant control regime is trying to do. Our regulations are focused on that ability to engage. At this stage, we have not focused on that second part of the second purpose, which is what you were saying about financial interests. I think that there is also a question of legislative competence around that in terms of whether our purpose is not to regulate the financial services industry or indeed counter-money laundering or those types of things. I think that it is just to be clear what we are trying to achieve with this register and be clear about what the purposes of it are. My final point is that you made two references there. This is an early draft and you are still considering it. Therefore, my final question is whether you consider making it possible if not necessarily being able to require that such information could be gathered as part of the registration process and thus be available at a later date. I think that that issue of voluntariness might be one that we will return to in other parts of the questioning. I think that we are certainly open to looking at those issues. As I say, we have to bear in mind our legislative competence to do those things. What could you do and what can't you do? Going beyond what we have in front of us, what are you capable of doing and you have chosen not to do and what are you prevented from doing? I think that there is a question about whether our register could gather information for the purposes of enforcing anti-money laundering legislation, for example. I do not think that that would be something. What our purpose is, essentially, is to increase transparency of land ownership to allow for better engagement with land owners in order to increase sustainable. I get that, but my question is that, given legislative competence, what could you do that you have not done so far and what are you actually or do you believe that you are prevented from doing? It is going to be quite difficult to give you a hard and fast definition of where the line is on competence. I think that what you are hearing is that we have been examining how far we can go and we are open to what comes back from the consultation and obviously the discussions will continue on where that boundary on competence lies, but we have taken a view that, given the purpose of this register, as set out in the legislation, if we go too far into areas of enforcing money laundering, we are likely to hit the competence barrier, but it is difficult to give a definite, here is the line and this is what we can and cannot do, but we hear the point that is being raised and we will obviously consider that further. People may have unreasonable expectations of how far you can go and it is just as well to try and get a clear indication of what is and is not possible. Can I just probe a bit on overseas trusts and their involvement, which is quite significant in the ownership of land in Scotland? We know that we have a significant number of rich individuals, dukes and herrels and untitled people and so on who own land in Scotland, but to avoid tax, they set up an overseas trust register in places like the cabins and so on. I would not name anybody, but you could name some of these people. For the purposes of the controlling interests, the reality is that these people really control the land. It is not about money laundering, it is about a legal tax dodge that is under UK law and international law that is allowed to do this. For the purposes of controlling interests, who in that situation is the controlling interest? Is it the person who has got the trust set up and benefiting from the tax dodge? Is it the overseas trust, which usually is a name plate somewhere in the cabins? It is not a company that you would not walk into and find an army of people managing the land over in Scotland, for example. Who is or are the controlling interests? For the purposes of the legislation? In relation to trusts, the provisions that they are applying to trust apply equally across whatever jurisdiction that the trust has been consecrated under. We have tried to cast net fairly widely to catch different forms of control, so we would look to register the trustees and we would look to register people who can direct the decisions of the trustees. We would look to direct those who can remove or appoint trustees or otherwise revoke the trust. We set out in paragraph 8 of schedule 1 a number of different forms of control that we would look to catch. There is a catch all provision there that otherwise has significant influence or control over the decision making of a trust to your trust, and that is designed to catch the many variations that you can see in how people may use the structures in a way that suits them and that they may influence the control. That point will be a bit further illustrated in guidance and we will be looking to take our views or examples that people may be aware of to make sure that we are catching control however it is constituted. In that situation, could both the person who has had the trust set up and who has inherited the land and handed it over to the trust, could both that person or persons and the trust both be registered as the controlling interest? It will depend a little on the formulation, but yes. Once we have registered completely, we should have a fair idea by proxy of who is dodging their taxes in Scotland in relation to land. That may be a conclusion that is drawn on what I would say. It will be a significant step forward in transparency as to who is controlling that decision making. It is important, because all of those trusts avoid paying taxes in Scotland. We have now got control of income tax. They should be liable for income tax, possibly. That is quite important. Are you linking in with the likes of Revenue Scotland and taking cognisance of its requirements as you draw up the legislation? We will certainly have conversations with Revenue Scotland going forward to see if there are links that we can be drawing and support the work that is on going in there. That should make it easier for Revenue Scotland to identify tax dodgers. It may well do. We will see as those conversations develop, we will get a better sense of how that will fit in together. You recognise the hopes and expectations that people have around the piece of work and the opportunities that it opens up, not just around transparency? Yes, absolutely. Our core purpose is to deliver that transparency to support engagement with people who are controlling decision making in relation to land, but clearly that is a significant piece of legislation, and it is important that we best support Government policy across the board as we can. Claudia Beamish Thank you, convener, and good morning to the panel. I have looked at interest with this having been, along with my colleagues, I am Graham Day and Angus Macdonald on the previous committee, when it was learned reform act was passed. That is not too in any way, and also Richard Lyle apologies. I did not remember you were on the committee at that point. The Community Land Scotland has obviously taken an interest, and all members received a briefing before this session. I would be interested to know, really to highlight their question, it is their question and I agree with it, I would not be asking it otherwise, about verification. What is the verification process, which could be quite onerous? On the other hand, could somebody come along and say that this is who you can contact, and then if there were any issues about compliance with one aspect of it, or if a community group tried to approach that person or that trust, and it was not in existence or it was not easily accessible, that would be concerning. So it is a verification process. Yes, so it is obviously important to the policy goal of the legislation that the information on the register is robust, is reliable and that it is usable. We have not been proposing a verification process at the point at which it is received. However, there is a number of measures within the legislation that we are looking to drive compliance with the register. In particular, the duties to provide information are accompanied by criminal offences that may be punishable by a fine. We will also, the keeper also has the power to amend the register to correct inaccuracies there, and that might be as a result of people drawing to her attention that the information does not appear to be accurate or that there has been an issue. I have already discussed the referrals to the lands tribunal as a backstop if that has not taken place to ensure. I think that these in combination we are looking to deliver significant robustness in the accuracy of the information as far as possible. With respect, that seems to suggest that it is only if things were going wrong that a weighty verification process would be enacted. Is that what you are thinking at the moment? Are we focusing on where issues have arisen in the register? I wonder whether, at the point of putting in information, as expected, when the regulations go through, which we hope they will, what will be the process of checking that that is valid? The keeper of the register of Scotland will not be verifying the information as they receive it. We have put the onus on the owner or tenant, and they are accompanying controlling interests to provide accurate information on the time basis that is within the draft regulations. As I mentioned, those are backed up by criminal offences, which I think that we have taken quite a serious approach to underlining the importance of complying and the necessity. I am sorry that I referred to my register of interests as a landowner, being neither a Duke nor an Earl, but someone who owns land in my own name. I would like to ask some questions about part 3. First, to understand the process by which you decided on the details of an associate, what did you consider when coming to what details of an associate was required? I have come back to some of the points that we have already discussed a little of today. We are looking to support the information that we have proposed that should be included. We prioritised supporting the engagement between a user of the register, whether an individual, a community or another landowner, with the people who hold in the controlling interests. That is why we proposed the person's month and year of birth to support distinguishing between various erals with an IP or their address at which they can be contacted and their name. Can I just ask about the address? Is that their residential address or what is in mind here? In many instances, if you are a trustee of a trust that owns land or a director of a company that owns land, you could just give the registered address of the company or the registered address of the trust. Do you have something more specific in mind? No, we have proposed that it should be a contact address. The important thing is that the person can be contacted at that address. That may be the address of a company. It may be a care of address, but the important thing is that it has to be a very genuine point of contact. It does not have to be the residential address. Can I just ask lastly about the regulation 13 subsection 7 that contains a defence to the provision of information that says, without reasonable excuse, what do you envisage reasonable excuse to include? The reasonable excuse provisions are designed to avoid situations where a person is on the hook having done their best to comply with the duties or having been exposed by another person, not to comply with the duties on them. That might be where an owner or tenant has investigated for their own sort of controlling interests and has corresponded with those people to verify the information and has received no response through no fault of their own. They may be considered not to be providing the accurate information, so that is where the reasonable excuse kicks in. It may also be that the owner takes reasonable steps to try to identify the controlling persons and they may not have been able to do so, so that could be contacting persons who may be aware of the controlling interests or otherwise examining for joint interests that might cumulatively amount to controlled interests. It should be a relatively high bar. It should not be a get-out clause. It should be designed purely to avoid situations where someone else is—sorry, do you want to go on? I just say as well that the regulations, while setting out one sort of example of what a reasonable excuse might be, do not limit that specifically to that example. It would depend on particular cases as well, so it may be that a court would think that on a particular set of circumstances a person had a reasonable excuse, so it is flexible in that sense as well. There were, as I recall, substantial discussions at the time of the passage of the bill around legitimate exemptions, and the example that was given was victims of domestic abuse. That is covered here. Are there any other exemptions that have been identified? As you say, we have got the exemption for protecting people at a personal risk, and the victims of domestic abuse are the clearest example of that probably. We have drawn it just a little wider to cover people who may not want to be registered because putting them on the register might endanger other people as a result. The example would be a refuge worker where that refuge is run by an unincorporate association. If that person can be linked to the refuge, he may give away the location of the refuge. It should be relatively narrow. It should not be a lot of cases—we are not anticipating a lot of cases—and we will be looking quite closely at consultation responses on that one. Sorry, Pauline Davidson. Can I just add that it is in the regulations that there is evidence that has to be provided in order to have that security declaration made? That is something that the keeper will be verifying on the point of receipt. Is there a role for Police Scotland and a sister in that process? Potentially in the provision of the evidence. Some of the evidence that might be accepted is attestations. Of course that would be the clearest length that would happen. Okay, that is good to get that on record. Thank you very much, convener. Just looking at the UK legislation persons with significant control register, which I referred to earlier, the indications are that around 130,000 companies are not yet complying with that. You have made the point that you will not be verifying the information. Even within those who are complying and that they have provided information, you clearly will have a proportion where the information is accidentally or deliberately incorrect that you are not checking. I have just heard from Pauline Davidson that the keeper will be expected to verify certain things in relation to the exemptions, which sounds baffly fair to me. Given that there is not a regime around all this and looking at the significant default—I regard 3 per cent as significant—that there is in a similar UK register, how well is this actually going to work and how are the regulators generally and the courts going to deal with all this? I understand that the current compliance rates of PSE are about 98 per cent. As you said, there is room for improvement there and I think that the company's house is taking that quite seriously. There are a number of things that you can do to support accurate information going on to the register. Global Witness has done some work with companies' houses on looking at how their processes have evolved. There are lessons to be learned on using things like drop-down menus rather than free text entry, and you get unintentional mistakes that, nonetheless, lead to inaccurate information going on the register. You are getting to the point of where, as someone is not either intentionally or unintentionally not taking the steps that are necessary to put information on, we would refer back to the penalties for non-compliance. We think that a criminal offence is significant and we have provided for the maximum penalty that is permitted within the 2016 act itself. We are obviously speaking with the Land's Tribunal about how they will engage with the process of referrals and speaking with Crown Office colleagues about the process of prosecution as well. Things like addresses can be verified quite straightforwardly by automated means, for example, using the Royal Mail register of all UK postal addresses. Although I do enter the caveat that for a period of two years our house was not on the register, it disappeared for some reason and we only discovered when NHS 24 denied we existed and we discovered we'd disappeared. We are now back, but that seems to be the definitive place for checking things. Would you expect them to use that? The implementation of the register is obviously versus Scotland, so we are leading on that. It has a number of processes and a number of possibilities and we are obviously continuing to speak with them. That is certainly something that we could look at. Generally, the determinations will be in the Land's Tribunal. Are they being resourced up to help on that, to an adequate extent? We are still having those conversations in the Land's Tribunal, but that is certainly a point that we will be discussing with them. We do not want to record my sense of not placing additional work on the Tribunal that slows down the important work that they are doing in other areas. We are still considering those points. I think that my colleague Gallant now asks about penalties, including perhaps the last bit of what is down to me. Could you clarify for us please what the maximum penalty is under the ROCI? It will be punishable by a criminal offence and by a fine of up to £5,000, which is level 5 on the scale. Any other panel comments on whether they think that that is sufficient to deter those who are seeking to avoid identification? Is there any comment on that? I appreciate what you have already highlighted that that is the maximum in relation to the 2016 act, but I would still value comment in terms of someone who is trying to avoid detection. I think that it is difficult for us to comment on whether it is sufficient or not. It is the maximum available to us. We will be interested in what the responses are to the consultation on that point, but we have gone as far as we can under the current legislation. To put it at its most stark, the on-going refusal to engage is £5K at the price of anonymity? We have heard that point raised. It is difficult for us to say yes or no to that, because we have pitched it at the maximum level. What would be the process to increase that level if that was considered to be necessary? The Land Reform 2016 act would need to be amended because the power to make these regulations includes a power to create criminal offences, but only up to the level of £5,000. Are there other offences that might apply for a consistent refusal to register? Is that something that you have considered at all? I am not asking because I know that there are other offences. I wonder. Beyond the criminal offence that we have proposed, I am not aware of any, but we can take that away to consider whether there are other options. Further pursuing the enforcement of non-compliance, could you explain to us at all at this stage how the Scottish Government would intend to enforce non-compliance and what process it will follow in advance of referring cases to the procurator fiscal? In terms of the process before it gets the procurator fiscal, I think that we need to need to explore that one at this stage, so we would have to pick that up in future. Should compliance with ROCI be a precondition of land registration? We consider that potential approach. We can understand the attraction to it. We have taken a different approach in our proposals for a couple of reasons. One is that making a condition of land registration or on transacting on the land emphasises the point at which you are transacting on the land, where we are keen that the information in the register be accurate across the piece, so we are proposing duties to update on an event-driven basis. Whereas, if you are making a precondition of land registration, you may only get very intermittent key points. The other point that is maybe worth making in relation to that— I am sorry to interrupt, but surely that could be updated, couldn't it? I mean that could be an obligation to update if things change. Yeah, absolutely. In that case, the incentives or the offences for not updating would be equivalent to the ones that we have proposed. It would remain in the same sort of way. Part of the issue, a little with the event-driven updates, which we think is important and we have chosen to emphasise, is that if you are making a condition of land registration or of transacting on the land, you would need some sort of system of registration numbers or placing restrictions on the land. If you are continually having to update those or lift and restate or replace restrictions, there could be a potential disruption to the property market as it can take a while for transactions to go through. We were wary of that and that is one of the reasons that we have stepped back. We think that it is very important that the information on the register is up-to-date and that is what we have chosen to focus on in this case. So, could it be at the point of sale, at the point of exchange of the formalities of contract, perhaps? Possibly. If there were a registration number that could be updated at any point to reflect a change in the controlling interests, that might disrupt the fact. It might not give the consistency that people are looking for as a sale can take months to go through, even on a house or in a much more extended period on a commercial property. I think that the possibility of updates within that process that could impact the convening process was something that we were aware of. Can I ask about a comment from a different direction? Let's look at possible leverage here to get people to register. The way that register will work and the way in which it will be accessed, is there scope for the register to identify which parcels of land have not got this information attached to them? Therefore, it could be a pressure brought to bear on those parcels of land, the owners of them, to register. Almost at an appropriate term, but a list of those who have not complied or a list of the properties that have no compliance attached to them. I think that this question links into how we are going to go about publicising the duties to make sure that people are aware of what is expected of them and that the information gets on to the register. It's clearly going to be a significant amount of work required to do so, and we're going to reach across different categories of entities. We're looking to be working with Registral Scotland themselves, but also with various representative groups, whether that's Community Land Scotland, the Scottish Land and Estates and the Charities Regulator, so that people are aware of what they are expected to be doing and are ensuring that the information is going on to register in that way. With respect, Scottish Land and Estates probably aren't your problem here, because they have taken a policy position in that, and you pretty much know who Scottish Land and Estates members are because they're part of the communities that they live in. It's the others that will be the issue, I would suspect. Those who don't comply will not be among that group. It's an interesting question, convener, because there will be lots of owners of land in whom there is no controlling interest. If I own land that my house sits on, there is no controlling interest, so I wouldn't be required to register. We'll have to see what comes back from the consultation, but we can't assume that, just because there is an absence of a registration under this register, that someone is hiding something. If we compare it to England, we've heard a compliance figure of 97 per cent. If we got to something like that, would you be in a position to actively highlight who the 3 per cent were? It may be possible to discern who they are. For instance, the land register will hold information. If we're talking about overseas legal entities, it's identifiable that it's held by an overseas legal entity. It could be that they don't have any controlling interests, but steps could be taken to make sure that they are certainly aware of what they should be doing. I think that the point is that it would be better to filter, in a sense, to filter the search, according to categories of ownership, rather than assuming necessarily that every entry in the land register ought, in theory, to have an entry in this register. I'm just seeking to explore what the options are to get us to the position that we all want to get to. John Scott. Can I just ask a slightly off-the-wall question on crofting interests and crofting registers. Is that covered by this piece of legislation or not? I know that the difficulty that has been in the mapping exercise for crofting and the establishment there of boundaries. I just wonder if you could like to talk around that subject a little, if it's relevant to this. I think that we have… I now should declare that I am a landowner. Thank you, convener, but yes, I am a landowner. I'm not a crofter, but I'm not a juvenile. Thank you for that clarification, Mr Neil. I'll let Andrew Cymru come in every second. The impact on crofters will depend on how they hold the land, whether it's held in a form that's impacted by the regulations. There will be a map-based element that comes from the link back to the land register, so we're not looking to duplicate the work that's gone on elsewhere. The duty on owners or tenants of land is to investigate whether they have any associates. That applies to tenants. It's only of registrable leases of leases over 20 years. We also have in schedule 1 to the regulations a provision about contractual relationships between individuals, but that doesn't include simple landlord-tenant relationships. I think that it would depend on the nature of the lease in respect of a croft, whether that was covered or not. I have just a couple of things. I do own land. I do have a baron in the family. My first cousin once removed. He did die in 1926, so it probably doesn't account. Anyway, just on trusts owning land, where the ownership details of a trust owning land may endure for hundreds of years, I take it that's part of the argument why we're not simply attaching it to change of ownership, because the beneficial interest will change even though the ownership of the land will not. The two are quite different timelines. I'm getting nodding heads, so that's okay. I've caught your eye, convener. From the point of view of beneficial interests, do the holders of standard securities who will almost invariably be in the land register, do they constitute beneficial interests since they can ultimately direct what happens to the land? I think that we've made exception for them in the regulations, because there are certain types of relationship that we are thinking is not really constituting a controlling interest in the sense that we are looking at. A creditor holding a standard securities is one of those. I think that lawyers giving advice to a partnership, for example, you could say that the person who follows that advice is the lawyer exercising influence over the decisions of the partnership. That relationship is exempted, so we're not including those types of professional relationships. In essence, a standard security is essentially contingent control, rather than actual control. Therefore, we're excluding contingencies. Yes, I think that it's the nature of the relationship. I'll pursue that with you a little bit more. In the regulations, the register of beneficial owners has been specifically excluded. As I understand, a person who enjoys the benefits of ownership, even though title to some form of property is in another name, seems to be a pretty obvious loophole to me. Can you explain why beneficial owners have not been included? What are the reasons for that? I think that when we're talking about beneficial owners here, essentially what we're talking about is beneficial interests. We're the ownership of properties held by somebody else, but somebody can obtain a benefit from that property, so a beneficiary and a trust, for example. I think that we don't really use the phrase beneficial owner in Scotland, because that's an English law term. What's the equivalent? I think that beneficial interests are the Scottish equivalent. Again, what we have taken that to mean in terms of a beneficial interest is purely a financial interest in a particular piece of land or property. Again, that comes back to what we see as the purpose of the regulations, which is to increase the transparency of the persons who are actually controlling the decisions that are made in respect of a piece of land. For example, in a trust situation, while a beneficiary of a trust may receive a financial benefit from that trust, they may not be in practice taking any decisions about what happens to the land. I think that the purposes of the legislation, as I've said, is to enable better engagement with the people who are controlling the decisions that are made in the land. That's what we've tried to focus on. In the case of that, we've focused on trustees and anyone who is really controlling the decisions that are made in relation to the land. How does that work in relation to families? I can think of several examples under previous land reform legislation, where aspirations of communities have been thwarted because of option agreements between members of the same family. I'm just wondering if you're trying to unpick that and understand where the power, where the influence is in terms of the control of a piece of land for development potential for whatever. Had you unpicked that, if those with a beneficial interest in the development of that land is not clear who they are because they're sitting behind the scenes, they're not included and they're not registered? We've tried to draft the regulations quite widely to make sure that in those unclear situations, if there's somebody who exercises significant influence or control over the decision making of the trust, regardless of their particular position, they should be registered. That's what we've tried to do, is to try and make sure that if there is control, that person is registered, whether or not they have a financial interest or not. Just on that point, how would you define such a person? At some of the points that we've discussed earlier about, in relation to our trust, it may be a person who can direct the decisions of the trustees, maybe the trustees themselves, it may be someone who can unilaterally revoke the trust, like an all-vage beneficiary of a bear trust, for example, or it may be someone who can appoint or remove the trustees, which is sometimes included in trust deeds, that sort of formulation. Stakeholders on the exclusion of beneficial interests? I think that when we've been discussing this with a whole range of stakeholders, I think that people have been generally understanding of our approach and I've understood the points that we've been making and the reasoning behind it. I think that we're aware going into this consultation that there's still a difference between conversations being had and seeing the full draft legislation and the expansion material with it, so we will expect people to look in at once they've had a chance to digest it and take on more detailed proposals to revisit those points and those conversations with them. Are there other ways to include interests such as a voluntary register or other options? I think that we're open to looking at the different ways that we might be able to deal with those situations and I think that we are certainly aware that there are a lot of different arrangements that can be reached and we're certainly, as Graeme said, we're looking to explore and test those regulations against that. I think that, again, in terms of what we're able to do or what we would wish to do, it comes back to what the purpose of the legislation is and why we are asking people to register. The purpose, as we've set out, is to try to identify who is actually controlling decision making in relation to land in order to increase transparency on that and allow for better engagement with those decision makers. In terms of those regulations and other registers, what proportion of Scotland's land will be covered by that? The intention, as a result of the regulations, is that there should no longer be a land registered in Scotland where the controlling interests in that are a peak. That, as you mentioned, does meet the use of the other registers that are already in place. I can give some numbers if that would be helpful. We understand that there are around 2.6 million titles to land in Scotland, about 260,000 of them are held by legal entities. We would expect the majority of those to be UK companies and limited liability partnerships or other entities that are covered by the PSE register that we've discussed. We are aware that around 2,500 titles are held by overseas legal entities, so those would obviously be picked up by the new register. There's also land held by individuals that may be held in trust or on behalf of partnerships that we've picked up by the new register, and we'll be doing work during the consultation to try to put some numbers to that scope. I think that I touched on earlier the issue about Fully Scotland. We know what the purpose of the register is, but there is a potential spin-off benefit from it, which would be where the police are looking to pursue a case of vicarious liability in relation to wildlife crime, and colleagues will perhaps remember that, when Police Scotland was in front of this committee previously, they indicated that there had been a situation in which they had been investigating the possibility of bringing a vicarious liability prosecution and had to abandon it because they couldn't identify who actually owned the land in question. It's a long-winded way of building up to asking, have you been talking to Police Scotland about how this can assist them in that way, and how confident are you that what's in front of us will get us to a point where Police Scotland can pursue vicarious liability cases quite red-away? Of course, with the support of the Crown Office, obviously. We have been in touch with Crown Office and we have been having those conversations. We're also in touch with relevant policy colleagues within the Scottish Government, and we're aware of the interest in what we're proposing to the purpose of identifying landowners around vicarious liability. I think that we're aware that, as I mentioned before, we can support a range of policy outcomes here, and we're keen to try to do so and to explore the possibilities there. I appreciate that there's been an interest—sorry—a subject of on-going interests for the committee going forward. The area of policy is under the same part of government as is responsible for these regulations, so wildlife and wildlife crime. We've definitely made those links. You would be quite optimistic that this will be of great assistance or considerable interest to the prosecution authorities in six years and later when I've just identified that. Or, at least, at minimum, identifying where there's an absence of information that could then be pursued. It wouldn't guarantee that that information was there, but it would identify where there was a gap. To my view, to make this work, the system has to be de-bust, informative, usable but not costly. I'm sure that someone else will ask that question shortly about cost. However, how will the register of controlling interests interact with other registers? Will the information held on registers be signposted from the register of controlling interests? We're keen to make the information about controlling interests as accessible as possible, and we are aware that information is held in different places. We're exploring with registers of Scotland and others how to do that, and some of the things that we're looking at are signposting and linking to other registers about providing comprehensive information about where to find out about land in Scotland. We think that the fact that the register will be free to access and search is an important factor in accessibility. We've had several discussions with registers of Scotland. One of the things that we are looking at is the feasibility of an electronic link, a technical solution, so that information in the new register is linked to information in the persons of significant control regime, so that people wouldn't necessarily have to go to two different websites. We're hoping—or we're looking at—it's early stages that they can go to the new register via register of Scotland systems and be able to pull in information about controlling interests if that's held in the register belonging to company's house. You were anticipating my next question. What are the risks and impacts of not having a single register containing all legally registerable property information? We have so many registers, so much information. Sometimes we can get snowed under with that information. Why shouldn't we have just one register? I think that the land register and the sassines are one of the places where land should all be registered. We know how important it is that that's all in one place and that's why Registers of Scotland have been invited to complete the land register and have some target dates for that. There's also Registers of Scotland doing further development on Scotland, which I'm sure you all have heard of, which is a key portal to go into and access all that different information. We're working with them to make sure that that does make it as easy as possible for people to find that information. There's a lot of different pieces of work going on. We're also making a key focus of our consultation so that people can tell us as well how would it be easier for them if it's something that we've not thought about. When Registers of Scotland develop the new register based on the proposals as they stand at the moment, which could of course change, they will do what they call a discovery process, so they'll be extensive testing with people who want to be able to access that information to take on board what their feedback would be and how it would be as easy as possible. When people buy their house, they get—and I'm neither a juicer or a lord or whatever—but when people buy their house to get a title deed, none amongst the title deed, sometimes it can be a map. What will this and other registers be map-based and will this happen? If it is map-based, how will that be checked to ensure accuracy as land variations do happen but sometimes are not recorded correctly? The intention is that the land register will be map-based and the new register of controlling interests will be directly linked to pieces of land that are on the land register, so in that sense it will be map-based. Scotland is very much working towards being a fully map-based system, although that is a work in progress and based on feedback from people that is being developed and improved all the time. On the point on Scotland, that is going to be the chief source of information. We are looking to dovetail with existing cadastral maps in the land registers that are expanded rather than duplicating and creating a new map-based element, which, as you would say, would then require to be quite closely maintained to avoid errors. It is better to use the existing system. To intend to dovetail with information that is held, in regard to farmers' holdings under the cap system? Is that a no-no? What is it? Have you got particular information in mind? I had an interesting visit to one of the local offices where they showed me the computer system and how they go out to the land and check, walk around with the computer—I am sure that you have seen it—and check the land up to the nearest inch of what people own. When you get into land registers and so on, people can get very uptight about six inches and 12 inches or whatever, and fences do move, as we all know. Are you tying up with other systems like that? The main source will be the land register and the cadastral map. Can I just pick up one before I hand on my colleague John Scott? We are all engaged in this from a policy perspective and a strategic level, but for most people out there, this is about how it works in practice. Can you give us a sense of what it would mean to somebody seeking to find information? How easy do you envisage this becoming? I think that this will improve the transparency and a lot of the work that we are trying to do about accessibility will generally, in time, improve how people can access the system. People want to find out—I do not know—that there is a community and an urban piece of land, and they want to find out who is making decisions about that. The new proposals should enable them to find out from the land register the idea of the land and then go behind that and find out who is actually making decisions about that. We want it to be a straightforward and smooth process in our working to do that. On the back of that, is there a capacity if someone does that and finds out that they cannot find out who it is that they need to get to, to draw that to the attention of the registers? Would there be any scope for following up on that if it was identifying that there was a gap in the register? The new register, yes. The third parties can tell the keeper of an inaccuracy and she does have powers if it is straightforward to change that, so yes, there is that. That is the first level that we are expecting a lot of the inaccuracies that are going to take place. OK. Keith Clawdor, do you want to come in there? No. OK. Thanks for that. Thank you, convener, and can I just ask you about setup and on-going costs and what estimate of set-up costs and cost to businesses? What are your estimates of that cost of compliance? We currently estimate that it will cost £3 million to develop and to build and to set up the new register based on the proposed draft regulations as they are at the moment. That will provide a distinct comprehensive system for accessing information about people who control land. That might change if the proposals change, but that is currently the early estimate that we are working towards. In terms of costs to businesses, the partial business and regulatory impact assessment does discuss costs to business and what we are planning to do is to develop much further and to do a Scottish firms impact assessment to speak to industry representatives to businesses and to others to clearly define individual costs to businesses. On a sort of straightforward business registration, a ballpark figure might be a few tens of pounds, a few hundreds of pounds or a few thousand. We have looked at what the UK Government's business impact assessment for the person of significant control regime is. There are some lessons that we can learn from that, but it is not a straight extrapolation into our new registers because the proposals are different. We think that initial costs will be slightly higher for individual businesses, and then it will reduce down on an on-going basis. I think that our experience has been costs in the tens rather than significantly higher. The Scottish firms impact test that was referred to requires us to go and speak directly to businesses that are going to be affected and to discuss with them the processes and try to reach quite a robust figure on that basis. Thanks very much. I also just ask you about the on-going costs for the registers of Scotland, the on-going maintenance of the register. Have you had discussions with the registers about those likely costs? Are you at liberty to tell us what they might be? We have had many discussions with registers of Scotland about costs since the 2016 act was passed, and those discussions are continuing. The on-going costs for IT support on an annual basis will be something between £70,000 and £84,000 per annum. That is an early estimate, again, based on the draft proposals and could change. There will also be additional staff support costs on top of that. However, as I said, discussions with the rows are continuing, and we are pleased that one of the results of those discussions is that access will be free to the register and the current proposals. However, we can keep the committee updated on those points of finance as costs are developed further. Just for the avoidance of doubt or confusion, there won't be any need to build a new IT system, I hope, as difficult as it is. It is not a completely new IT system. It will need to build a register that people will register the details online so that there will be a new system, but it will be linked to others. The other thing that might be useful to update on is the progress around the consultation that you have referred to on a number of occasions. That is an on-going situation. As well as any financial update, if anything comes to mind after this session or in the time ahead, you could write and keep us updated. I think that that would be appreciated by colleagues. Stuart Stevenson. We have just heard, and I had forgotten that I had read, that, of course, applicants will register online. We have previously heard that applicants will not be providing their email address. Will they have to provide their email address as part of the online registration process to allow an interaction between the register and the registry, and hence you will be in receipt of an email address that you could include in the register? Is that a fair characterisation? How the keeper will correspond with people who are registering information is, ultimately, an operational question. A large part of that will be digitised. However, we are not proposing to include the email address on the register at the moment. However, as part of the registration process, it will be captured or an email address will be captured. I think that the point is an email address. Yes. I made the distinction, Mr Carlaw. Do any colleagues have further questions, Mr Neil? It is a quick answer. You said at the beginning, Graham, that the purpose was to be able to get hold of people if there is a problem. Sometimes the problem, and the convener referred, for example, to wildlife crime might be a problem that relates to that. It is quite an urgent problem. Does it not just make sense to have the email address and the telephone number where, even if you do not make that public on the public register, at least then you know very quickly where to contact other relevant authorities, know who to contact and to do so PDQ? It seems daft to me not to capture, in this day and age, the email address and the telephone number. It is fairly basic. Supposing that the controlling interest is in the Cayman Islands and one of those unfilled offices, you are not going to get hold of anybody very quickly. It seems to me that it is daft not to have an email address and a telephone number. It is an interesting example, and it is a fair point to raise. We can take that one away and look at it. If you do reflect on that, it would be useful to hear back from you on it, because Mr Neil makes a very good point that it just seems no reason not to have this information. As he says, you do not need to make it public, but there would be sense in having it. Following on from Alex Neil's question, at the end of the day you have the electoral role where people can have some information that is not disclosed publicly to some companies by the electoral role. Do you want to look at that, too? Thank you for that. Thank you for your time, ladies and gentlemen. This morning, I was quite useful to get a feel for who we are at with this. You have undertaken to keep us updated. I hold you to that. Please do keep us updated in any progress that is relevant to the committee's consideration. I thank you for your time. At its next meeting on 27 June, which is tomorrow, the committee will hear oral evidence from the right honourable Michael Gove MP, Secretary of State for the Environment, Food and Rural Affairs via video conferencing on the environmental implications for Scotland of the UK leaving the EU. As agreed earlier, the committee will now move into private session and I request that the public gallery be vacated as the public part of the meeting is now closed.