Changes to UK company law and Companies House
The Economic Crime and Corporate Transparency Act received royal assent on 26 October 2023 and will introduce a number of changes over the next few years.
The act gives Companies House the power to play a more significant role in tackling economic crime and supporting economic growth. Over time, the measures will lead to improved transparency and more accurate and trusted information on Companies House registers.
Under the Act, there will be new responsibilities for:
• all new and existing company directors;
• people with significant control of a company (PSCs); and
• anyone who files on behalf of a company.
The new legislation generally applies to all entities registered with Companies House, and applies to companies and other entities registered in England and Wales, Scotland, and Northern Ireland and applies to anyone who files on behalf of clients, such as accountants and company formation agents.
Some of the changes include:
• Greater powers for Companies House to query information, stronger checks on company names, new rules for registered office addresses, and new lawful purpose statements;
• Identity verification – Anyone setting up, running, owning, or controlling a company in the UK will need to verify their identity;
• Transitioning towards filing accounts by software only, and changes to small company
accounts filing options;
• Increasing Companies House fees to take new future expenditure into account, as well as making sure costs are recovered from existing expenditure;
• Protecting personal information – Individuals will be able to apply to suppress personal information from historical documents and apply to have personal information protected from public view because of risk of harm;
• Changes for limited partnerships – these will need to file their information through
authorised agents, and they will need to file more information with Companies House; and
• More effective investigation and enforcement powers for Companies House, and new
powers to share data with law enforcement agencies and other government departments.
Changes to accounts
The changes to the preparation and filing of accounts are designed to improve the quality and value of financial information on the register. As part of the modernisation and digitalisation of filing routes, the way of filing annual accounts with Companies House is changing.
The new legislation lays the foundation for Companies House to require companies to file accounts in a digital format. To comply with these changes, all companies will need to find suitable software before web-based and paper filing options are no longer available.
This applies to directors who file accounts themselves, and companies who use third-party agents or accountants to file their annual accounts.
The move to filing accounts by software only will be phased in over the next 2 to 3 years.
Simplifying filing obligations
Small and micro-entity companies will need to file their profit and loss accounts. The detail of what they will need to include will be set out in secondary legislation. How, or in what circumstances, the provision might be applied in practice is still being considered.
Small companies that do not qualify as micro entities will also need to file a directors’ report.
Small companies will no longer have the option to prepare and file abridged accounts.
Audit exemption statement
Any company claiming an audit exemption will need to give an additional statement from their directors on the balance sheet to specify which exemption is being claimed, and confirm that the company qualifies for the exemption.