What is it?
The Economic Crime and Corporate Transparency Bill is currently making its way through Parliament. This legislation is set to fundamentally change the role of Companies House as the Registrar of Companies. It introduces a considerable number of changes that companies will need to be aware of and, in some instances, take action to comply with.
The bill aims to tackle the rising levels of corporate crime and the use of UK-registered entities to facilitate illegitimate activities, such as money laundering. The hope is that by introducing tighter controls on incorporation and more stringent filing requirements, those wishing to use the UK business structure for illegitimate reasons will be deterred from doing so. This, in turn, will boost confidence in the UK structure and improve the integrity of the Companies House register.
Who is it for?
UK registered private and public companies and limited liability partnerships. There are also provisions being debated that will affect limited partnerships, but these changes are still being debated.
The reforms also include changes relating to Directors and Persons with Significant Control (PSC's) and providers of Corporate Services such as Accountants and Solicitors.
How does it work?
The legislation will introduce several changes to tighten controls to prevent money laundering and corporate crime; to increase the transparency and integrity of the information held by Companies House.
The changes set to be implemented include the following:
- ID Verification for current directors of UK registered companies; and for all new directors before the appointment (or incorporation) – to be done either via a service provider or directly with Companies House via a newly established portal.
- ID Verification for current PSC's of UK registered companies; and for all new PSC's as well. There are some differences between the verification requirements for directors and PSC's.
- Changes to the types of accounts that small and micro-entities can file to Companies House.
- Changes to the requirements around keeping Statutory Registers.
- Introduction of tighter controls over the registration of company names.
- Changes to rules surrounding the appointment of Corporate Directors.
- Introduction of a registered email address for companies.
- Introduction of increased powers for the Registrar to check, question, analyse and remove information submitted to Companies House.
- Increased powers for the Register to proactively share information with other specified government bodies.
- Introduction of new powers to suppress sensitive information from the Register.
These topics will each be covered in more detail in further briefings and uploaded to our "Latest Briefings" page in due course.
Additional changes are currently being debated, which are likely to go even further than those above. However, there is currently very limited information on when these might be expected.
- Changes to the timescales for filing accounts and corporation tax.
- Introducing a requirement for all accounts to be filed digitally, removing the option to file on paper. All digital accounts will also need to be "tagged" in IXBRL, as they are currently for filings to HMRC.
- Introducing a limitation on the number of times an accounting reference period can be shortened to bring this in line with the rules regarding extending accounting reference periods.
These changes are likely to take some time to implement, and therefore it is expected that they will be introduced later via secondary legislation. Nevertheless, companies need to be aware of the scale of the reforms, so they can prepare appropriately to ensure they remain compliant with the law.
What should I do next?
At the moment, there is yet to be a specified timeline for when these reforms will be enacted into law. However, it is anticipated that the legislation will likely achieve Royal Assent in Spring 2023. In the meantime, there are some things that companies can do in anticipation of these changes.
Firstly, all companies that are required to submit a confirmation statement should ensure that their members' list contains the full legal name of each member. Any entries which contain preferred or shortened versions of legal names should be updated (e.g., Tom instead of Thomas). Once the legislation is enacted into law, the first Confirmation Statement submitted after the enactment date will need to include a members list containing the full legal name of each member, so it is recommended that companies undertake this exercise as early as possible.
Secondly, companies should also start to think about the email address they will use as the "Registered Email", which Companies House will use primarily for correspondence. While this can be a director's personal email, it is not recommended. Any change to this registered email will need to be notified to Companies House, so using a personal email could cause communication problems if that individual leaves the company.
Finally, companies may consider communicating with directors and PSC's that new requirements regarding the verification of ID will be coming into force. More information regarding the requirements for directors and PSC's separately, and the other changes will be posted shortly to our briefings page, so please do check back for updates.
If you have any queries regarding the above or other questions, please do not hesitate to contact Charlotte Leslie at 01865 261119 or email.
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