Get Ready, For Companies House Is A Changin’

In 2024, Companies House implemented significant reforms under the Economic Crime and Corporate Transparency Act 2023 (ECCT Act) to enhance corporate transparency, compliance and combat financial crime.

If you are an entrepreneur looking to form a company, or any one of the following – Board Director, Company Secretary, Shareholder, Person of Significant Control, Beneficial Owner of Shares, Trustee or other stakeholder – you should be aware of the key changes, which include:

1. Identity Verification

· Mandatory Verification: All new and existing company directors, Persons with Significant Control (PSCs), and individuals filing documents with Companies House are required to verify their identity. This measure aims to prevent the registration of fictitious directors and enhance the reliability of corporate data.

· Verification Process: Individuals can verify their identity directly through Companies House or via an Authorised Corporate Service Provider (ACSP). The process typically involves linking a person to a primary identity document, such as a passport or driving licence, and may include electronic likeness matching.

2. Authorised Corporate Service Providers (ACSPs)

· Registration Requirement: Third-party agents, including accountants, legal professionals, and company formation agents, must register as ACSPs to file information on behalf of clients.

To qualify, they must:

o Be based in the UK.

o Be supervised by a UK anti-money laundering (AML) supervisory body.

o Register with Companies House and provide their AML supervisory body membership number.

· Responsibilities: ACSPs are required to verify the identities of their clients to the same standard as direct verification and retain records of these checks.

Companies House has the authority to suspend or revoke an ACSP’s registration if they fail to comply with the required standards.

3. Financial Penalties and Enforcement

· Late Filing Penalties: Companies House imposes financial penalties for the late submission of accounts, with fines ranging from £150 to £15,000, depending on the length of the delay.

It is worth noting, however, that reports indicate that less than half of these fines were collected in the 2023/24 period, highlighting challenges in enforcement.

· Enhanced Powers: Companies House has historically accepted all submissions in good faith. Due to widespread abuse of the system, the changes will provide Companies House with greater authority to scrutinise, query and reject information, request supporting evidence, and share data with other government departments and law enforcement agencies to tackle fraud and inaccuracies.

New criminal offences and civil penalties have been introduced to complement these measures.

4. Changes to Company Accounts

· Registered Office Address: All companies are now required to have an appropriate registered office address at all times; the use of PO Box addresses is no longer permitted.

· Registered Email Address: Companies must supply a registered email address to facilitate communication with Companies House.

· Lawful Purpose Confirmation: Upon incorporation and during the annual confirmation statement, companies must confirm that they are forming and operating for lawful purposes.

· Filing Company Accounts and Tax Returns: Another notable change is the planned closure of the joint online filing service for company accounts and tax returns, which will take effect on 31 March 2026.

This service currently allows companies to file both their annual accounts with Companies House and their Company Tax Returns with HM Revenue & Customs (HMRC) simultaneously.

After this date, companies will need to adopt alternative filing methods.

Alternative Filing Methods Available:

1. Commercial Software: Companies will be required to use commercial software to file their Company Tax Returns with HMRC. This shift aligns with HMRC’s move towards digital tax reporting and aims to modernize the filing process.

2. Companies House Web Services: For filing annual accounts, companies can utilize Companies House’s web services. This platform will continue to support digital submissions, ensuring a streamlined process for companies.

3. Paper Filing: Although digital methods are encouraged, companies retain the option to file their annual accounts with Companies House via traditional paper-based submissions. However, it’s important to note that HMRC will require the

use of software solutions for Company Tax Returns, reinforcing the push towards digital tax reporting.

Our Advice and Preparation Recommendations:

· Transition Planning: Companies currently using the joint online filing service should begin exploring and selecting suitable commercial software solutions well before the March 2026 deadline to ensure a smooth transition.

· Data Backup: It’s advisable to download and securely store copies of past filings from the existing system, as access may be restricted after the service closes.

· Stay Informed: Regularly consult official communications from Companies House and HMRC for updates on filing requirements and approved software providers.

In summary, these changes underscore the UK’s commitment to enhancing corporate transparency and streamlining regulatory processes, aiming to deter fraudulent activities and ensure the integrity of the corporate register.

By proactively adapting to these new requirements, companies can ensure continued compliance and efficient management of their filing obligations.

If you require any assistance or support with Company Law or Companies House questions, please contact our Business Services Team at 0808 164 0698 or by email at [email protected]