Updates to the Economic Crime and Corporate Transparency Act: What Your Business Needs to Know

Posted 3 April 2024

As the government rolls out changes to the Economic Crime and Corporate Transparency act, businesses must stay vigilant to ensure compliance with evolving regulations. As your trusted advisors, we are on a mission to keep you informed of these changes and their implications for your operations. Here’s a breakdown of the key updates that may impact you: 


Digital Filing 

 The government is moving towards modernising filing procedures by introducing software-only filing for annual accounts. This shift aims to enhance the quality of data on the register and promote a more sustainable future.  


While many businesses already file via software, those following more traditional filing methods will need to transition to software that has the capability to file to the register.  


This transition is designed to be phased over the next 3 years, and the Government have confirmed they will be detailing a timetable for the implementation.  


Small Company Filing 

Small and micro-entity companies will now be required to file profit and loss accounts, in compliance with section 396. Details of these requirements will be specified in secondary legislation.  


Though this may increase the transparency of your business’ financial success each year by making the information publicly available, it also enables stakeholders to make better-informed decisions. In reality, this means that those companies looking for finance are now able to display their creditworthiness, assisting the growth of your small business. 


Those businesses who are classified as ‘small’ will also need to now file a directors’ report. This does not apply to those that qualify as micro-entities.  


Many companies who fall into this category would have typically opted to file abridged accounts (a simplified version of your accounts). However, the government are removing this option, with a goal to simplify the framework and avoid confusion on your responsibilities (not to mention costly errors!)  


 Claiming an Audit Exemption 

Companies claiming an audit exemption must now provide an additional directors’ statement on the balance sheet, specifying the exemption claimed and confirming the company’s eligibility to do so. Before the introduction of these new measures, it was troublesome for the government to confirm eligibility with the condensed filing options available for smaller companies. Now, with the removal of abridged accounts, the introduction of filing a profit and loss accounts and the new statement requirement, it is much easier. 


Companies House 

Every company (including non-trading and dormant) must file a confirmation statement each year and this remains the same. However, the government is now obliging an additional statement that requires the business to confirm their intended future activities are lawful. 


Existing and newly incorporated companies must now provide a registered email address for filing confirmation statements (this can be for a director, or someone acting on your behalf such as your accountant).  


Notably, Companies House fees will increase from 1 May 2024, affecting all businesses. For instance, the fee for a confirmation statement will rise from £13.00 to £34.00 for digital and software filings, and to £62.00 for paper filings.  


Identity Verification

All directors and individuals holding significant control (PSCs) across various company types (Ltd, LLP etc) must undergo identity verification in an effort to combat illegal activity.  


Existing companies will be granted a transition period to verify their identity with Companies House in the upcoming months. We’ll ensure you stay informed about the implementation timeline and provide guidance on the verification process.  


Additionally, anyone acting on behalf of a company (such as us!), must verify their identity before submitting any information to Companies House. This measure aims to enhance transparency and accountability in corporate filings and safeguarding against fraudulent activities.  


These updates necessitate proactive measures to adapt to changing regulations. As these changes unfold over the coming months and years, it’s crucial to seek guidance from experienced professionals to ensure requirements are complied with effectively. Stay tuned for further updates and insights as we continue to support you in navigating these regulatory changes.  


For more information about our Accounting & tax Services, visit our Accounts page: https://cbtax.com/accounting-tax-services/