AccountingWEB flags some of the common mistakes and potential trouble spots businesses face when interacting with Companies House.
Given the volume of recent legislative changes and enhancements to digital filing, accountants, business filers and company secretaries should remind themselves of their obligations when engaging with Companies House.
Along with the 26 June implementation of the new anti-money laundering measures affecting the requirements for people with significant control, Companies House itself has undergone a digital transformation in recent months as it heads towards a 2019 plan to be 100% digital.
One of the reasons for Companies House pressing ahead with its digital plans are compounded by the number of errors that result from filing on paper: the latest figures show 9% of paper-filed accounts are rejected.
The rejection reasons range from simple oversights to accuracy issues, including:
- Signature and printed name: one or other forgotten
- Name: must be the exact company name (as per Companies House record)
- Failure to use the full name and using the trading or colloquial name instead
- Number put in incorrectly
- Correct exemption statements not always included
- Failure to check the accounting reference date on the Companies House service and getting it wrong
- Spelling errors eg the letters ‘I’ and ‘E’ the wrong way round
- Correct symbols/punctuation not included
While these accuracy-based rejections are easy to remedy, there are also mounting legislative changes that are likely to cause more problematic compliance pitfalls.
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New accounts filing options for small companies
A big change for many users during the peak filing period at the end of September was the end of abbreviated accounts. In the absence of this option, Companies House has seen customers discover alternative options: either filing micro-entity accounts (the smallest type) or full small accounts.
The minimal disclosures in a set of micro-entity accounts has proved popular in some quarters. But this alternative option is not for everyone, and some have chosen not to file micros as they don't disclose much information.
Some customers have started to file the new abridged accounts type, but the volume of abridged accounts filed have so far been low. This is often the case when a new option is introduced and it is likely that volumes will increase in the future, particularly as Companies House has recently introduced a new way to file abridged accounts online.
Filing abridged accounts online
Companies House have recently launched a new private beta which allows companies to file abridged accounts via the Companies House Service. This is a free web-based option available to small companies that wish to file unaudited abridged accounts. This service should be welcomed by the large numbers of companies who have web filed abbreviated accounts in previous years.
The beta service will be available for everyone to use without having to formally opt-in. Users who want to try the service can choose the option to file abridged accounts using the Companies House’s web-based service.
This service is open to small companies that have an accounting period starting on or after 1 January 2016. In order to qualify as a small company, you must meet at least two of the following criteria:
- a turnover of no more than £10.2m,
- a balance sheet total of no more than £5.1m, and
- an average number of employees no more than 50.
If you meet the criteria and would like to try the new service, please send an email to [email protected]
The anti-money laundering (AML) changes mean that people of significant control (PSC) information is no longer updated on the confirmation statement. Instead, any PSC changes need to be made as and when they happen. Companies House should be notified on forms PSC01 and PSC09 (for companies, there are separate forms for other entity types, such as LLPs).
The new AML measures were implemented to increase transparency over who owns and controls companies as a result of the EU 4th Money Laundering Directive. Companies now have 14 days to update their PSC record, and a further 14 days in which to update the public record.
Register of PSC errors
Regardless of the AML changes, some companies still struggle to correctly record their people with significant control.
Here are some of the common errors that result in rejection:
- Companies House has reported incidents where some people tick all five conditions when identifying a PSC.
- Claiming exemptions from disclosure of information. Sometimes people are claiming an exemption to which they are not entitled.
Meanwhile, another concern is disclosure of information. PSCs can use a service address but a number of companies will provide a service address for their directors and still provide their PSC’s home address. Companies House warns that by doing this, companies are unnecessarily exposing their PSC’s home address.
Identifying a PSC
Another issue Companies House has flagged is identifying a PSC. For the most part identifying a PSC is fairly self explanatory. PSC are almost invariably, but not always, going to be directors. But when the company is shrouded in a complex structure, knowing who to assign in this position is not that straightforward.
Here are a few reminders from Companies House to ensure you’re PSC compliant:
- Identify a PSC and make sure they are listed promptly: You're meant to identify your PSC and then check with them if they're happy to be listed. You can't name anyone as a PSC of your company without having checked with them first.
- Keep the register up-to-date: If someone is a PSC make sure they're shown on the register. And make sure they’re shown as soon as they fall into being a PSC. People sometimes forget the need to update the record as a change occurs.
- Conversely, when someone is no longer a PSC, companies should remove that person from the register.
About Richard Hattersley
Richard is AccountingWEB's practice correspondent. If you have any comments or suggestions for us get in touch.