Companies House reform
The Economic Crime and Corporate Transparency Bill is now at the final stages of approval and includes several potentially significant changes, therefore the below provides some information on what we may expect.
Part of the purpose of the Bill is the Companies House reform, which is set to include:
- Introduction of identity verification for all new and existing directors, PSCs and those delivering documents to Companies House;
- Increasing Companies House powers to check, remove or decline information submitted to, or already on the company register;
- Improving the financial information on the register so it is more reliable, complete and accurate, reflecting the latest advancements in digital technology; and
- Providing Companies House with more effective investigation and enforcement powers, along with the introduction of better cross-checking of data with other public and private sector bodies. This includes the ability for Co House to pro-actively share information with law enforcement bodies.
Within the Companies House reform changes there are three areas of particular to note:
- Companies House expects that the bill will grant them power to mandate how accounts are filed. They have reviewed the process and are looking at (in their words) a single, cost-effective, sustainable way of filing accounts, which will be secure, transparent and traceable. The solution is that this will be via a software upload, so will remove the option to file via posting paper accounts. Companies House have also suggested that they will be requiring more data to be electronically tagged within the accounts, which will use a specialist accounts taxonomy.
- Companies House are looking to simplify and reduce the number of options for filing of micro and small accounts. Under their proposed framework all small and micro sized entities will have to file accounts which include their profit and loss account. The format of the profit and loss will be set out in secondary legislation, but it is expected to require at least turnover and profit / loss to be clearly shown.
- A requirement for all companies relying on an audit exemption to provide an additional statement by the directors on the balance sheet, confirming the exemption being relied upon and confirmation that the company meets the qualifying criteria.
Whilst the above is not yet in place, the bill as of 21 July 2023, has passed both the House of Commons and the House of Lords reviews and is now awaiting Royal Assent, suggesting that these changes are coming at some point in the future.
Further updates will be provided once the bill obtains Royal Assent and a timetable for these changes is known.