The idea behind the Small Business, Enterprise and Employment Act (2015) is to improve the way small businesses operate in the UK. The legislation does this by making company ownership more transparent and by simplifying parts of the statutory filing proc
While this should make life easier for anybody who runs a small business, it won’t all be plain sailing as the Act also aims to prevent tax evasion. Business owners need to be aware of the new requirements if they want to avoid falling foul of the rules.
Improving trust and transparency
Among the major changes that have came out of the legislation, the People with Significant Control (PSC) register, which came into force on 30 June 2016, is one of the most important.
The PSC register means that businesses now have a statutory duty to take reasonable steps to identify the individuals or companies who have ultimate beneficial ownership and control of UK companies (and limited liability partnerships). This is a further register that companies and LLPs are required to maintain in addition to its list of members or shareholders.
Where a company has reasonable cause to believe there has been a change to the PSC, the company must contact the PSC as soon as they can to seek confirmation of the change. The company must then update its registers accordingly. The new information must be filed with Companies House.
If a PSC fails to disclose any information requested by the company, they risk being found guilty of a criminal offence. Any company or director who neglects to update the details on the PSC register may also find themselves facing criminal charges.
So what does this mean for you or your company? If you haven’t already prepared a PSC register you must do so straight away and submit it to Companies House. Government guidance says the PSC register must never be empty, so even if you haven’t yet obtained the required information you should put a statement on the register saying that you are taking reasonable steps to do so.
Simplifying the annual return
On the plus side, the Companies House filing system has been simplified. The aim of this is to reduce the administrative burden on companies, particularly on smaller companies, and to improve the reliability of the information available on the public register.
The most notable change here is that rather than complete an annual return, companies now have to file a confirmation statement. Unlike an annual return, a confirmation statement does not have to be filed on a set date but instead it must be completed at least once in a 12-month period.
The rationale for this is that it gives companies the opportunity to file the statement at the same time as other documents. This also means that information previously filed does not need to be re-entered, and that a statement of capital or a list of members does not have to be filed with each return if the information has not changed. This alone should help cut some of the red tape that ties down small companies.
Finally, a private company can now keep its statutory registers at Companies House instead of the registered office. For those companies that take advantage of this option, maintaining just one public register will remove an element of duplication.