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PSC regime tightened

11th Jul 2017
Founder Azura Cloud Systems (Gbooks)
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A change has been made to the Persons of Significant Control (PSC) regime. Under the new system firms must inform Companies House of any changes to beneficial ownership shortly after the change occurs, and will no longer be required (or permitted) to report information about PSCs via the Confirmation Statement. In this article, Matt Bailey, the founder of Gbooks, looks at the background to the change, and how the new system will affect accountants going forward.

The original PSC regime was introduced by the UK government in order to increase corporate transparency and meet a G8 commitment made in 2013. The legal framework was included in the Small Business, Enterprise & Employment Act 2015, and the rules came into force in April 2016.

The PSC requirements began at the same time as confirmation statements were introduced and, under the Companies Act 2006 section 853I, firms were required to include details of PSCs when filing a confirmation statement. There was no requirement to notify the Registrar of changes to PSC information between confirmation statements.

The 4th EU anti money laundering directive, enacted on 25 June 2015, contains a requirement that “Member States shall ensure that corporate and other legal entities incorporated within their territory are required to obtain and hold … information on their beneficial ownership”. It goes on to state that this information must be held in a central register, and that “Member States shall require that the information held in the central register… is adequate, accurate and current”. EU members were given a two-year window to comply with the new rules.

While the UK was ahead of the curve on most of the directive’s beneficial ownership requirements, the need for the information held on the central register to be “current” was not being met.

Under the old regime a firm could identify a new PSC, or the details of an existing PSC could change, the day after a confirmation statement date. However, the firm was only required to update the central register a year later when the next confirmation statement was due.

The UK has modified its PSC regime to meet the requirements of the EU directive. The general election, and the resulting hung parliament, created uncertainty in terms of timing, but the changes were implemented (by statutory instrument) immediately prior to the two-year implementation deadline. Companies House updated its systems on 26 June 2017.

Under the new rules changes to PSCs become an “event driven” filing, similar to changes in officer details. The various deadlines are as follows:

  • If a company has reasonable cause to believe an entity has ceased to be a PSC, or that the details of a PSC have changed, they must contact the person to confirm the change within the following 14 days (the previous deadline was “as soon as practicable”);
  • On receiving the confirmation (due within a month, as before) the firm must update the PSC register within the following 14 days (no grace period was given in the previous regime); and
  • Firms that have not elected to keep the PSC register at Companies House must notify the registrar within the following 14 days after the register has been updated (no deadline applied previously).

Failure to follow these requirements is a criminal offence and can result in a fine or a prison sentence of up to two years.

The Companies House forms to notify of changes to PSCs (PSC01-09, or LLPSC01-09 for LLPs) were already in place and are largely unchanged. The confirmation statement form has been modified, with the section asking for details of current PSCs removed entirely from the “additional information” supplement. Firms are instead required to confirm that the PSC information (along with most other company data) held at the registrar was accurate at the time of the confirmation statement.

So where are accountants left by these changes? One big change is in the filing of confirmation statements, with the onus now on checking that the PSC information held by the registrar is correct before filing the CS01. On a practical note, uncertainty over the timing of the changes (plus other distractions such as MTD) may mean some software providers are not yet ready for the new regime.

And, most importantly, accountants should advise their clients on the new deadlines, in particular the requirement to notify the registrar within 14 days of any changes to the PSC register. While I somehow doubt I’ll ever read the headline “Director jailed for PSC notification failures”, it’s better to be safe than sorry.

Replies (9)

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By BryanS1958
12th Jul 2017 10:52

The faster we leave the EU the better, for 95% of clients (for my practice make that 100%) this is just an extra cost for no benefit. I do wish the bureaucrats would stop their endless tinkering - just take away their computers and let them try and use their brains instead.

Thanks (2)
Replying to BryanS1958:
By davidrupp
12th Jul 2017 11:09

As the author states - this is a G8 commitment and so the UK would need to comply whether in or out of the EU

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Replying to BryanS1958:
By mabzden
12th Jul 2017 12:19

Another way to look at this is that we set some sensible rules and the EU has followed our lead - not for the first time. So hopefully a light is now being shone on shady practices in Cyprus, Luxembourg etc, and this has got to be a good thing. And the regime in the UK is largely as it was a month ago.

We then moan (again, not for the first time) that the rules we were instrumental in developing apply to us too. OK, we've had to make a small change, but reporting changes to PSCs as they happen should probably have been in place from the outset. We just got our domestic law wrong on that point.

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By Ian McTernan CTA
12th Jul 2017 11:02

More pointless short time period paperwork with fines and penalties attached.

If only the EU would leave people to actually get on with running their businesses rather than endless form filling...

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Replying to Ian McTernan CTA:
By SteveHa
12th Jul 2017 21:08

Fines and penalties? Criminal offence - could go way beyond fines and penalties.

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By martinhayward
12th Jul 2017 11:04

Agree with your sentiments regarding the pointless tinkering. I am not a remainer but I dont think it would make any difference whether in EU or not. Our political masters and their bureaucratic minions are quite capable of thinking up crackpot ideas themselves without the help of the EU e.g MTD

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Replying to martinhayward:
By Nick Graves
12th Jul 2017 11:31

martinhayward wrote:

Agree with your sentiments regarding the pointless tinkering. I am not a remainer but I dont think it would make any difference whether in EU or not. Our political masters and their bureaucratic minions are quite capable of thinking up crackpot ideas themselves without the help of the EU e.g MTD

All part of the NWO 1984-control system, I'm afraid.

If you fall foul of them (through dissidence, probably) they'll be able to obtain all your meta-data at the push of a button, concoct a case against you and sequestrate your assets without any of that tedious, expensive 'burden of proof' legal stuff.

Of course, the bureauprats are too incompetent to make it work properly in accordance with their masters' grand plan, so it will be 99.9% inconvenience and value-subtracted cost, for 0.1% gain. But these people are clueless about economics.

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By AndrewV12
12th Jul 2017 11:57

I suppose it just underlines to check all information on the Conformation statement with the client before you file it.

To retain a record of the enquiry it will have to be done by email, another bloody email.

The days of starting preparing accounts dead on 9am have long gone. First its the email sweep.

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By pauljohnston
13th Jul 2017 08:30

@ Andrew - YOu are begining to sound like a bureaucrat which I am sure you are not, we can ask our clients as hard as we like but none with take any notice.

Just like when you produce a set of business accounts all that 99% of the clients are interest in is - where do I sign and how much tax is payable.

As others have said in most cases the information is in the public domain or at the HMRC, Passport Office, DVLA or at Companies House and the bank so why can't they all authomatically check these data bases and through up anomallies?

Just seen a client his UK passport and Driving Licence have different spellings of his surname

In most cases I only hear from clients with address changes is when I mail to the old address and then get updated. I dont think that the new PSC rules wil make the details cahnges any quicker. For those persons/companies acting outside the law I suspect nothing wiull happen

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