The Economic Crime and Corporate Transparency Bill

The Economic Crime and Corporate Transparency Bill has now got Royal Assent, so significant changes are being made the identification process, company registration and filings at Companies House (and yes, there are admin, time and cost implications). If you are a director or shareholder of a company, these changes affect you. 

 

If you’re a client of any of our companies, you will be getting details through when the secondary legislation is approved and timetables known, but for now, we’re headlining this information for you. 

 

 

There are significant changes proposed under the Economic Crime & Corporate Transparency Bill for how companies report their financial information and what financial information they must publicly report. This will particularly affect small and micro entities and the filing of their accounts, as these companies have, to date, been able to file public accounts with minimal information. The changes are designed to address the insufficient (and sometimes inaccurate) financial information currently on the companies register. 

 

What is changing? 

 

• All small companies must file complete accounts including a balance sheet, profit and loss account and a directors’ report. 

• Micro-entities must file a balance sheet and a profit and loss account (a directors’ report is optional). 

• Abridged and filleted accounts will be abolished. 

• An eligibility statement will be required by companies claiming an audit exemption. This may particularly affect dormant companies. This aims to provide the Registrar with additional evidence to take stronger enforcement action for false audit exemption filings in the future. 

 

It is also proposed to mandate digital filing and full tagging of financial information in iXBRL format as well as reducing the number of times a company can shorten its accounting reference period. However, these changes are expected to happen at a later date after the initial implementation phase of the Bill. 

 

 

The following people will have to prove they are who they say they are by verifying their identity: 

 

• existing directors, 

• new directors, 

• existing people with significant control (PSCs), 

• new PSCs, and 

• those who deliver documents to the Registrar at Companies House (CH). 

 

Identity verification will ensure that there is always a verified natural person associated with an incorporation or a filing. Each director, PSC and those presenting information on the register will have an account that includes a verified identity and links their appointment in one place. Where an individual has more than one role or is registered with multiple companies as a director or a PSC, all that information will be contained in one place on the register. 

Anyone wishing to file documents with the Registrar will also need to verify their identity before they do so. This includes anyone delivering documents to the Registrar of Companies on behalf of another person, including companies. 

 

It is expected that ID verification will be a one-off requirement. Once a person is verified, they obtain a verified status. There may be instances where re-verification is required, for example, if someone changes their name. Details will be set out in secondary legislation. 

 

How ID Verification Will Work? 

 

It is proposed that there will be two types of ID verification: 

 

• direct verification via Companies House (CH); 

• an indirect route through an Authorised Corporate Service Provider (ACSP) – yes we’ll ensure that the senior consultants at our companies will be registered as ACP’s so we can help you 

 

So a lot of changes, this will increase the work, filing and verification processes that everyone associated with a company will go through.