The annual return will soon be no more. As from the end of this month it is being replaced by the ‘Confirmation Statement’, a shorter document stating that the information held by Companies House is correct as of a certain date.
The rationale behind the new statement is that it frees firms from the drudgery of having to re-submit information on their annual return that Companies House already holds. However the bad news is there is work to be done before this time-saving nirvana can be reached.
First of all, when does this happen? The date to remember is 30 June 2016 - companies will not be asked to complete annual returns made up to this date or later. By default, the first “confirmation date” will fall a year after the made-up date of the last annual return, although firms can bring this forward if they wish. The confirmation statement is due within 14 days of the confirmation date - a tighter deadline than the 28 day grace period for annual returns.
As with the old regime, the confirmation statement cannot be used to inform Companies House of new information if a separate form exists for doing so. So any changes to the registered office (and/or SAIL) address, or any changes or updates to the company’s officers, must be notified to Companies House separately before the confirmation statement is filed. And if the company is taking advantage of the new right to hold its statutory registers at Companies House, these registers must also be updated separately.
There is some information that needs to be submitted along with the confirmation statement. Accountants will be very familiar with some of these items - any changes to the main activity (i.e. SIC code) of the firm, and privately-held firms not holding their register of members’ interests at Companies House will need to report changes to members’ shareholdings.
Importantly, the firm must also provide updated information about people with significant control (PSCs). Companies House does not currently hold this information, so firms incorporated prior to 30 June 2016 need to send details (broadly the same as those required for directors) with their first confirmation statement. They also need to say why the person is a PSC (for example, because they own more than 25% of the shares) and the date on which they became a PSC. This date can be no earlier than 6 April 2016 as the PSC requirements began on that date.
The confirmation statement may also need to be accompanied by an updated statement of capital. This will be necessary if the firm’s capital structure has changed since the last annual return (or any later filing containing a statement of capital such as an SH01 form). The statement of capital includes the total number of shares issued, the aggregate nominal value and the aggregate amount unpaid, plus the number of shares, the aggregate nominal value and the prescribed particulars for each class of share.
But the good news is, once all this information has been provided, the firm will only need to report changes when submitting subsequent confirmation statements. The firm can also choose the date for the confirmation statement, perhaps to coincide with other statutory filings or to fall in an otherwise quiet time of year. And, while the filing fees are the same as for annual returns, the new fees are annual charges and any subsequent filings within the following twelve month period will be covered.
So what should accountants make of this new regime? Although designed to be a time-saving measure, particularly for the 25,000 or so firms still filing annual returns in paper format, it is another new measure to get to grips with. And it is likely to increase compliance workloads in the short term.
But ultimately, once the new information has been submitted, the new rules may save accountants a small amount of time each year - just in time for the introduction of quarterly reporting.
Matt Bailey is the founder of cloud-based tax and accounts system Gbooks.
About Matt Bailey
Founder of Azura Cloud Systems (Gbooks), the leading cloud-based tax and accounts system.