Jennifer Adams looks at the Companies House Business Plan review for 2017/18 and asks whether the 'People of Significant Control Register' is doing its job.
In an ever changing world of business every operation needs a business plan and Companies House is no different. The plan is published annually, in line with other government departments. However, it is a fairly recent requirement for Companies House, the first issue being for the year 2014/15.
The '2017/18 Business Plan' and its accompanying publication ‘Our strategy 2017 to 2020’ were published this week with the aim to set out their agenda towards a five year plan of change. As with another closely related government department the main aim is for full digitalisation by 2019/20. Unfortunately, there are other similarities with HMRC for example the word 'customer' is used throughout the text, there is the same ‘it's all going to be wonderful’ stance and the same belief that “The new digital service also reduces the risk of errors occurring in this critical transaction”. However, this is where the similarities end in that (unlike HMRC) Companies House recognises that it has an important role to play towards the final aim and is not afraid to admit that there is more to do – "We know we have to get the systems and process right before we can move everyone away from paper". It will be asking why some companies still file accounts on paper and act on those reasons by focusing "our efforts on ensuring these customers are able to move from paper to digital systems easily", "support and educate them (customers) in making sure they comply fully with their obligations to file a confirmation statement in each twelve month period."
Increase of online facilities
The plan starts with a review of the substantial amount of work that the department has undertaken during the past three years in moving away from paper to online submission and acknowledges the input of staff in doing so. Among the detail of past achievements are some interesting facts - '5 million requests per day for company information'... the processing of 10 million transactions, including a new record of over 80,000 in one day during December, through to the provision of our digital services that already account for 85% of those filings... with 94% of accounts filed on time'),
The department is adding to the current availability of online submission by creating further online facilities (some of which might not have been used by members as yet); most notably the facility for viewers of the site to 'Follow' which was launched on 13 March 2017.
This facility is similar to the use of 'Follow' on Facebook or LinkedIn and enables the registering of interest in a company with the registered person automatically being notified when anything is filed in relation to those companies. The email contains a link to the company's filing history and the viewer is able to download a copy of the document for free.
Extending the range of transactions
The range of transactions enabled online has been extended and this will continue. One such item that has been placed onsite recently is the ability for customers to dissolve a company digitally. The intention is to have digital filing options for 99% of all account types in place by March 2018.
One registration facility for both Companies House and HMRC
One facility which will be welcomed by accountants is the 'Streamlined Company Registration Service' to be launched later this year which will link with HMRC to enable the registration of incorporation and of certain business taxes in a single transaction.
Consolidated insolvency rules – April 2017
Companies House has been working to implement the new insolvency rules which came into force on 6 April 2017. Insolvency practitioners are required to submit specific forms to Companies House as they proceed through the various forms of insolvency. Companies House has updated the forms in good time for the starting date.
RTI for PSCs – the Fourth Anti Money Laundering directive
'Real time' has come to Companies House with the implementation of the fourth Anti-Money Laundering Directive which comes into operation on 26 June. Under this directive the Register of People with Significant Control (PSC) will be extended such that PSC details will no longer be updated on the confirmation statement annually, instead companies will be required to inform Companies House on forms PSC01 to PSC09 whenever there is a change. Companies have 14 days to update their PSC register and an additional 14 days to submit the information to Companies House. Companies House has had to add to its software to facilitate this change.
Concentration on the PSC
In a comment that shows that Companies House is not complacent in their achievements to date is their intention to “Focus our attention on improving the integrity of the information on the register contacting those entities with clearly incorrect PSC data to help them complete their record properly.”
This is to be welcomed as there are still some errors and omissions in the PSC process as Global Witness found in a PSC review meeting held on 17 November 2016. The attendees were 30 volunteer data scientists, the aims being to review the use of the register, to see whether there were any gaps or inaccuracies and to ascertain how far the register could be used in the investigation of companies and their beneficial owners.
Although they found the information useful, they did find a number of flaws in the system which they believe were partly due to confusion by those completing the form and partly as a result of how the register was created. Overall their findings are of concern as the inaccuracies appear not to have been picked up by Companies House at the time. The detail of the findings can be found here.
In summary and quoting from the text:
Almost 3,000 companies listed their beneficial owner as a company with a tax haven address – something which is not allowed
The nationality field needs to be reviewed as 500 ways of inputting ' British' were found including 10 people who had typed 'Cornish'
The meeting was concerned that 10% of companies claimed to have no beneficial owner which could be possible as 25% is the threshold but the members thought that the figure was high and needed investigating
2,160 owners had a birth date of 2016 and there were also those who listed 9988 as their date of birth
76 beneficial owners shared the same name and date of birth as someone on the US sanctions list (although the meeting did acknowledge that this might just be a coincidence)
Overall of all the government departments that accountants have dealings with Companies House is the most efficient and approachable but as with HMRC they do need to be more outgoing in explaining the rules to directors and those who submit documents.
One area in which Companies House needs to be more forthcoming is on advising customers of the possible criminal proceeds that could result from the non submission or incorrect completion of the PSC. The author was told by a client who had incorrectly completed the PSC that he “would take my chances” when told of the criminal offence – people are not worried so long as something has been submitted. It would be a pity if Companies House took a leaf out of HMRC's book and introduced 'nudges' on the site but they do need to at least give the impression that they are concerned should a PSC not be completed or completed accurately.