Radical shake up for Companies House is biggest in 175 years
Radical proposals for the future of Companies House
Companies House is undergoing a revolution; hoping to usher in the biggest changes to the organisation since it was created in 1844.
The proposed reforms are about improving transparency and accuracy, both about the information it holds, and what it knows of the individuals running businesses. It is also about beefing up the powers of Companies House, making it less of a passive information holder, and giving it more clout to act on incorrect information.
Why is this happening?
The Government wants the UK to be the best place to start and grow a business, with a transparent and attractive business landscape. It feels Companies House needs greater scope to combat economic crime and improve protection for businesses. This is partly about futureproofing Companies House, as well as giving it a significantly more robust function. The fundamentals of what Companies House does won’t change, but how they do it will.
What do the proposals include?
ith several main themes, the Keytime team has summarised the key points here:
- Identity checks: The proposal is that directors, persons of significant control and those filing information (this includes accountants) will need to verify their ID. This may also be rolled out to shareholders.
- Increased transparency: The plan is to increase the visibility of who sets up, manages and controls a business. This includes being able to more accurately link individuals with companies and limit the number of directorships someone can hold.
- Accuracy of data: The aim is to improve the accuracy of information on the register. The intention is to give Companies House the power to query information ahead of publishing it and remove anything inaccurate. This will include accounts filed by a business.
- Two registers: The proposed changes would see the introduction of public information and non-public sensitive information. The latter would be subject to strict controls, supplied to likes of credit checking agencies, as well as certain public bodies, like the Police. Only authorised and identified people would be able to file information.
- Shift in power: This would allow Companies House to act on incorrect information, rather than just holding and publicising it. This is an important step, giving them more ‘teeth’ than they ever had before. Companies House would be able to cross-check data against that held by other organisations, exchange intelligence and identify possible criminal activity more readily.
- Embracing digital: The Minister for Small Business, Consumers and Corporate Responsibility says that the transformation of Companies House is a “great opportunity” to deploy the latest technology, which will create a more informative, responsive and reliable register. All systems and services will become ‘digital first’.
What do accountants need to pay attention to?
Aside from the key points laid out above, the Government also wants to bring in a more uniform format for filing accounts, to allow for easier automated checks and better analysis.
Additionally, it has been spotted that the shortening of accounting reference periods is open to being abused; potentially because a company is experiencing financial difficulties or to conceal fraudulent activity. Working with HMRC, there is an investigation into this, and we should expect some changes to the submission requirements.
What stage in the process are we at? The Government published its consultation on corporate transparency and register reform in May 2019. A consultation period was then launched to provide feedback on the proposed reform, which closed in August. The register currently includes over 4 million businesses already, so it will be interesting to see how many made their voices heard.
What else is changing?
Companies House has already started making significant shifts. It has already begun a transformation programme, which is focused on having the right staff in place, excellent systems, and offering the best services.
It has been a long time coming but change is afoot, and if all the proposals outlined here are to proceed, we will witness the biggest reform to the UK’s company registration framework in over 175 years.