The Economic Crime and Corporate Transparency Act became law on 26 of October 2023, giving Companies House increased powers to tackle economic crime, whilst aiming to enhance the transparency and accuracy of information on the company register.
This has been hailed by some as the ‘biggest shakeup’ of Companies house that has taken place since its establishment 180 years ago.
Whilst these changes became law in late 2023, their implementation will take place from early 2024 and into the coming months.
Beyond the wider affects, read our summary of some of the key changes and how these might affect you and your company…
Filing accounts
Small companies will not be able to prepare and file abridged accounts and will now have to file both their profit and loss account and director’s report.
Micro-entities must also file their profit and loss account, but filing a director’s report will remain optional.
Although both groups are required to file their profit and loss account, this information (or parts of it) won’t necessarily be available to the public. This may be a relief to those concerned that commercially sensitive details could be made accessible.
Software-only filing is expected to be introduced over the next two or three years.
Exemptions
Previously, micro-entities were not required to file a profit and loss account. This made it more challenging for Companies House to determine whether they should be entitled to the relevant exemptions, as they only had their balance sheet and information on their number of employees to work from.
Now the Act requires them to file the profit and loss account (whether it is made publicly available or not); this will mean Companies House can identify micro-entities with greater accuracy.
Small companies and micro-entities can claim audit exemption. Directors must include a statement on their balance sheet of the exemption they wish to claim, as well as confirmation that their company is eligible for this claim.
Identity checks
All existing and new company directors and people with significant control will have to undergo identity verification.
These new, more stringent procedures will be carried out by either Companies House or an authorised company service provider, such as an accountancy firm.
Directors will not be considered legally appointed unless their identification is properly verified.
Confirmation statements
All companies, including dormant and non-trading companies, must file a confirmation statement at least once a year, confirming that the information Companies House holds is up-to-date. This statement must be filed even if there weren’t any changes during the review period.
From 4 March 2024, all companies must:
- Provide a registered email address; this address will not be available to the public
- Confirm that their intended future activities will be lawful
Note: The filing fee is also increasing to £34 from 1 May 2024, alongside other Companies House fee increases.
Need some assistance?
Whilst the Act should demonstrate some positive outcomes such as decreased financial crime, some of its contents will result in an increased burden on small businesses. They will be required to provide more details than before and might consequently find remaining compliant more difficult.
At Burton Sweet, we can ease this strain by offering guidance and practical support, so gathering and filing the relevant information is seamless.
If you would like some assistance with any of the topics covered in this article, please contact us and member of our team will be happy to help.
