March 13, 2024
If you are looking for an expert to help you deal with the changes introduced by the Economic Crime and Corporate Transparency Act, be sure to contact the team at RRL on 01872 276116 or 01736 339322 or [email protected] www.rrlcornwall. co.uk.
Michelle Dash, Manager at RRL Cornwall, explains recent changes to UK company law, featured in this month’s Cornwall Living magazine.
The Economic Crime and Corporate Transparency Act (the Act) received Royal Assent on October 26, 2023, with Companies House anticipating the first changes to UK company law from March 4 this year. At the time of writing, the introduction of these changes is still pending secondary legislation and therefore the implementation date is still subject to parliamentary timetables.
The law aims to introduce measures that will lead to greater transparency and more accurate records in public company registers by giving Companies House the power to play a more prominent role in tackling economic crime.
So what does this mean for you? If you are a director of a company, a person with significant control of a company (PSC), or are filing on behalf of a company, you need to be aware of the changes. The measures, expected to come into force from March 4, include granting Companies House greater powers to query information and request supporting evidence. It will be able to review and reject information that it believes is incorrect or inconsistent. This makes it all the more important to submit correct and relevant information in the register. If a company does not respond to a request for more information, it could face a fine, a notice in company records, or criminal prosecution.
The law also introduces stricter controls on company names that could give a false or misleading impression to the public and introduces new rules for registered company addresses. In fact, businesses that currently use a PO Box will need to change addresses before March 4th as PO Boxes are no longer permitted. If Companies House is satisfied that a company’s address is not appropriate, it will be moved to a standard Companies House address. The company must then provide a suitable address with proof of ownership within 28 days, otherwise proceedings may be initiated to remove the company from the register.
In addition to these changes, all companies will be required to provide a registered email address. This is not visible to people viewing the register, but Companies House will use it for correspondence. For existing companies, this must be stated in the next confirmation declaration. When setting up, new companies must also certify that they are setting up the company for a lawful purpose. Existing companies must confirm in their confirmation statement every year that their future activities are lawful.
There is also the option to annotate the register to alert users to potential problems with the information provided to Companies House. Data matching tools are used to identify and remove inaccurate information to clean the registry, and the data provided in the registry is shared with other government departments and law enforcement agencies.
These are just the changes expected starting March 4th. Other changes the bill will introduce at a later date include introducing new filing options for small businesses. Small and micro-enterprises will have to submit their profit and loss accounts and the option to submit a short balance sheet will be removed. For many, this is a significant change. Some owner-managed businesses and family businesses may be concerned about the increasing availability of financial information to the public — this may lead to changes in the way these business owners obtain funds from the business. This should be considered now.
We may also expect identity verification for anyone who sets up, runs, owns or controls a company or LLP. This is intended to deter those who want to use companies for illegal purposes. For new companies, all directors and PSCs must verify their identities upon incorporation of the company. There will be a transition period for existing companies. Further information on the verification process will be provided by Companies House in the coming months.
Every company that applies for tax exemption must submit an additional statement from the board of directors in the balance sheet. Directors must indicate which exemption is being sought and confirm that the company qualifies for the exemption.
Finally, Companies House is aiming for full digitalisation of document filing, meaning all accounts must be archived using software.
In short, with the introduction of the law, many changes will be made. If you are unsure how to proceed or what changes your business needs to make to meet new demands and changes, it is always worth seeking expert advice.
This article was published for Cornwall Living magazine on March 11, 2024 (pages 90–91): Cornwall Living 146 by Engine House Media – Issuu
