All change at Companies House!

Accountancy, News,

As part of the Government’s response to Russia’s invasion of Ukraine, it has fast-tracked the Economic Crime (Transparency and Enforcement) Bill 2022. At the same time, it published a white paper that will make dramatic changes at Companies House, and to the information that Limited Companies must put into the public domain.

These changes are aimed at preventing the manipulation of the Companies House service, and avoid the use of anonymous or fraudulent shell companies and partnerships. As a result Companies House role will change and it will start to check and analyse the information it receives. Previously it was much more of a repository.

Though it’s not the only change (see below) the most significant change will be for small companies.

A small company is currently designated by having two of the following three characteristics:

  • Turnover of £10.2 million or less.
  • A Balance Sheet value of £5.1million or less.
  • Less than 50 employees.

The ability to file abridged accounts will be removed for small companies, who will instead have to file an Income Statement (the Profit and Loss Account), a Statement of Financial Position (the Balance Sheet) and a Directors Report. These will become part of the public record and available to anyone.

This will take away any element of secrecy and make details of profits available to the competition and to customers for these companies. Prior to this announcement, it wasn’t until your business grew beyond these levels that these aspects had to be published.

At the moment we have no timescales for these changes, but will of course let you know as soon as we do. Whilst we agree entirely with any activity to reduce fraud and crime of any sort, we’re less inclined to agree with this element of the white paper.

Additional Changes

  1. Companies House will also have powers to question director appointments or filings, to request further evidence or reject the filing. It will also be able to share data with law enforcement, other government bodies and the private sector.
  2. Those setting up, managing, and controlling companies and other registrable entities will need to have a verified identity with Companies House, or have registered and verified their identity via an anti-money laundering supervised third-party agent. Individuals who fail to verify their identity or comply with new requirements under these reforms will be subject to new criminal and civil sanctions. Penalties are yet to be announced, but could include director bans.
  3. Companies House will analyse the data submitted to the record, enabling it to seek further information or involve law enforcement for further investigation.
  4. The Government also plans to restrict the use of corporate directorships for UK registered entities.

Secretary of state Kwasi Kwarteng said: ‘The agency will be transformed into a custodian of accurate and detailed information – ensuring that we can clamp down on those who seek to abuse UK corporate structures to launder money. Anyone setting up, running, owning or controlling a company in the UK will need to verify their identity with Companies House, who will then be able to challenge dubious information and inform the security agencies. Company agents from overseas will no longer be able to create companies in the UK on behalf of foreign criminals or secretive oligarchs.’

To improve privacy, it will also remove the requirement to provide a business occupation.

Whilst the announcement has been hastened as a result of the recent sanctions against Russia, the plan has been in place for some time for Companies House to be granted extra powers and to adopt an enhanced role.

As we hear more, we’ll keep you informed. If you have any concerns in the meantime, please get in touch.

Business News

We send regular updates that keep clients aware of changes and suggestions on a wide range of subjects; if you’d like to receive those too, just add your details below and we’ll do the rest! We promise not to bombard you and you can unsubscribe at any time.
  • This field is for validation purposes and should be left unchanged.