Upcoming Companies House Reforms
The Economic Crime and Corporate Transparency Bill is the second part of a legislative package designed to bring in stronger powers to tackle money laundering and other illicit activity and which sets out extensive provisions to reform Companies House. The first piece of legislation was enacted on 15 March 2022.
The latest Bill follows the Corporate Transparency and Register Reform White Paper publication which sets out the government’s response to reforming Companies House. The currently drafted legislation will bring in many reforms from this White Paper and is designed to improve the quality and value of financial information on the register.
Find out more about the key measures, summarized by ICAEW.
Simplifying filing obligations
The current obligations for small companies and micro-entities are within the same section. The latest Bill will simplify and streamline the filing options for small companies, which will no longer have the option to prepare and file abridged accounts. They will be required to file their profit and loss account, as well as directors’ report. This will remove the option of filing so-called ‘filleted’ accounts.
Micro-entities will also be required to file their profit and loss account but still will have the option not to prepare or file a directors’ report.
In order to reduce the risk of entities falsely claiming exemption from audit, the Bill makes the clear requirement for directors to identify the exemption being taken and confirmation that the company qualifies to take it.
Integrity of information
The Bill will provide Companies House with more powers to verify the integrity of documents submitted. However, the existing limited powers to correct documents that contain inconsistencies or appear incomplete will be removed. Those documents that are not consistent will be rejected if they cause the Registrar to doubt whether all requirements relating to its contents have been complied with. The document that have been rejected will be treated as not delivered.
The Registrar will also have the power to require the company to take all reasonable steps to resolve the inconsistency within a 14-day period.
Facilitating electronic delivery
Companies House will be given the authority to mandate the method by which documents are delivered. The Bill does not require companies to submit digitally tagged accounts in iXBRL format, however, these new powers pave the way to be introduced in the future.
The Bill also permits the Registrar to request filings consisting of more than one document to be filed together.
This Bill will be put to parliament for debate and is expected to obtain Royal Assent by next spring.
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