New powers to Companies House which came into effect on 4 March signal a series of sweeping changes to UK company law over the next two years. Jonathan Barber, Executive Director – UK, of the Institute of Financial Accountants (IFA), addresses the potential impact on clients, what actions to take, and the timeline for implementation.
Since gaining Royal assent in October 2023, the Economic Crime and Corporate Transparency Act (ECCT) has now started to bring in extensive reforms to Companies House and new regulations for companies, partnerships, and directors, through to 2026. The Act aims to enhance the role of Companies House and boost corporate transparency to combat economic crime and promote growth by improving company information.
This means that there will be new responsibilities for all new and existing registered company directors, people with significant control of a company (PSCs) and anyone who files on behalf of a company.
New rules surrounding Registered Offices
Companies are now required to have a valid physical address listed on the companies register, instead of a PO Box. This means that companies must always have an ‘appropriate address’ as their registered office.
A third-party address, such as an accountancy premises, can be a registered office address, as long as it meets the requirements for being considered an ‘appropriate address’.
Requirement to hold a registered email address
As of 4 March, every company must now supply Companies House with a registered email address. Companies House will use this email address for communication purposes, however, it will not be disclosed on the public register.
Any company that fails to maintain an appropriate registered email address will be committing an offence.
New lawful purpose statement introduced
Also required as of now, is for clients to confirm that their company is being formed for lawful purposes if they decide to incorporate it. Additionally, they will need to ensure that the activities their company intends to carry out are also lawful by including this information in the confirmation statement. Documents lacking a statement of lawful purposes won’t be accepted.
This change has been implemented to emphasise that all registered companies have a responsibility to operate within the boundaries of the law. If Companies House receives any information suggesting otherwise, they may take appropriate action.
For existing companies, they must include a statement of lawful purpose when filing their first confirmation statement, with a statement date on or after 5 March 2024.
New Companies House fees
As of 1 May, there are increased fees applied to take new future expenditure into account, as well as making sure costs are recovered from existing expenditure. A full list of company incorporation and registration fees can be found on the Government website.
Company ownership transparency
Additional shareholder information will be required to be notified to Companies House and there will be restrictions on the use of corporate directors.
Identity verification measures
Identity verification is one of the significant measures being introduced by the ECCT Act by the end of 2024. Individuals who are starting, managing, owning, or overseeing a business in the UK must adhere to new identity verification regulations, and will have the ability to verify their identity in advance of the legal requirement.
Implementing identity verification procedures will enhance the data on both new and current directors. Authorised Corporate Service Providers (ACSPs) can start to apply to be authorised to verify the identity of their clients. Individual ACSPs will have to verify their identity to be authorised.
From spring 2025 onwards, IDV roll-out is set to continue, initially with directors and PSCs; 12-month transition provisions will apply to existing directors and PSCs, with all filings to follow approximately six months later. Limited partnership reforms will be aligned so that a six-month transition period will coincide with completion of transition for directors and PSCs, meaning that anyone filing on behalf of a company must verify their identity.
More changes further ahead
Firms will need to start preparing for reforms to financial statements relating to small and micro entities. Under the new framework, all small companies, including micro-entities, will be required to file their profit and loss accounts. The aim of having key information such as turnover and profit or loss available on the public register is to help creditors and consumers make better-informed decisions. Furthermore, it will improve the value of the information on the register for users.
There will also be a requirement for any company relying on an audit exemption to enhance it by providing an additional statement by the directors on the balance sheet, confirming the exemption being relied upon, and that the company meets the qualifying criteria.
Mandatory digitisation will also come into effect, with the removal of a paper filing option for most companies and the requirement for accounts to be filed digitally and fully tagged using iXBRL, the application of computer-readable tags to business data. Use of software will improve transparency, traceability, and validation of accounts filings, helping tackle economic crime and providing more information for enforcement agencies and the public.
By early 2026, some 21 months ahead of the new requirements being introduced, Companies House will be writing to all businesses affected.
For further information, visit:
- Changes to UK company law – Changes to UK company law
- Changes at a glance – Changes to UK company law Companies House changes