30 November 2022
Major changes to how Companies House operates, including what is filed and verified, are being proposed in the Economic Crime and Corporate Transparency Bill (the Bill) issued in September 2022, as originally introduced by a Government white paper in February 2022.
Our specialist Corporate Secretarial team takes a closer look at some of the reforms proposed by the Government, how these may impact you, and what can be done to prepare.
Why the reforms?
The Government’s aim is to make the UK economy the best regulated in the world. The reforms to Companies House contribute to three key Government priorities, namely:
- national security, anti-corruption and fighting organised crime;
- protecting individuals and businesses from fraud; and
- boosting enterprise through the promotion of digital reporting and improving the quality of financial information on the register.
In the Autumn 2021 Budget, the Government committed £63m to transforming every aspect of Companies House operations to deliver on its new responsibilities.
What will be included?
The 58 reforms across 9 areas in the February 2022 white paper have been streamlined into five key areas under the draft Economic Crime and Corporate Transparency Bill (the Bill):
- Expanding the role and powers of the Registrar;
- Introducing identity verification measures;
- Enhancing data sharing;
- Preventing abuse of personal information on the register; and
- Improving the financial information on the register.
We’ll be looking at the reforms in more detail in a series of further articles including how the Bill will impact companies and their directors, shareholders, preparers, and users of accounts. We will also consider the impact on other entities such as limited liability partnerships, limited partnerships, and overseas companies.
What can you do to prepare?
Whilst there is currently little to do on points 1 to 4 above other than general housekeeping, on point 5, we expect all small entities will need to file their profit and loss account with Companies House. This will result in disclosing profitability to competitors, suppliers, customers, and employees. Ensuring cost allocations are optimised between gross profit, distribution and administration should be a key action all small businesses can take now.
When is this happening?
There are currently no fixed dates for the reforms and indeed some will require changes to primary legislation which can take some time to reach enactment.
However, the Bill which will implement this primary legislation is moving at pace, going to Report stage in late November having been debated in Committee stage after its first and second readings in the House of Commons in September and October 2022. It will now move through Report stage and its 3rd reading before going through the usual process including House of Lords before it is presented for Royal Assent.
Given Companies House budget has been increased to implement its digital strategy, we should expect changes in the next year or so.
Please get in touch with Trish Sankey in our Corporate Secretarial team to discuss the implications for your business, or your usual RSM contact.