Following on from news that the Government has issued a consultation document proposing a ‘major upgrade’ to the responsibilities and powers of Companies House, this is the third in a series of articles that will look closer at the changes suggested by the Government and the potential effect they may have on private limited companies.
This article will focus on the proposed changes to the data that Companies House currently holds on companies, directors, people with significant control, presenters and shareholders.
What Are the Proposed Changes?
Companies House do not currently have any power to query, amend or remove information from the register – apart from in a very few specific circumstances. As a standard of practice, Companies House accepts the information that is provided under the belief that it is correct and that the register is accurate. However, there are times when information filed is incorrect or suspected to be incorrect by Companies House and increasing numbers of complaints are being made from third parties about inaccurate information held on the register. At present, it is not always possible for Companies House to take action.
The consultation looked at areas where Companies House may need to operate in a different way. It proposes Companies House should continue to work closely with law enforcement agencies but with increases in its powers to share information held on the register to assist them. This would lead to an increase in the accuracy of the data on the register.
Louise Smyth, Chief Executive of Companies House, said: ‘This package of reforms represents a significant milestone for Companies House as they will enable us to play a greater part in tackling economic crime, protect directors from identity theft and fraud, and improve the accuracy of the register.’
Who Do The Changes Apply To?
The proposed changes would be applicable to anyone with information held on the Companies House register or anyone looking to submit new information. This will mean that instead of accepting new information and dealing with inaccuracies when notified, they would be looking at a more proactive approach of querying information before it is entered on the register.
What Will They Mean for Me?
As part of the changes, Companies House would have the ability to ask for further evidence, wherever needed, to substantiate information that is being added to the register.
Examples of such instances may be:
- where a company files information such as an increase in share capital, evidence of this may be requested;
- where a company uses a registered address, Companies House may ask for evidence of the right to use that address; or
- where a company claims an exemption from filing full accounts, Companies House could request proof that the company is entitled to that exemption.
The government also states that where an application to remove information filed by a company is made by a third party, that the registered company should have to provide evidence to support their objection.
Alongside changes to the powers of questioning held by Companies House, the Government is proposing to introduce a more uniform format for submitted accounts. This will allow for automated checking processes to be implemented and improve statistical analysis. They also propose to put a limit on the number of times a company can shorten its accounting period as they feel this is currently being abused. The Government has yet to specify what the maximum should be.
When Could This Be Implemented?
As outlined in our previous articles, the consultation admits the reforms to Companies House systems will require primary legislation to be enacted, increases in staffing and training and could take years to deliver.
We will look at the remaining changes proposed in greater detail over the next two articles. Our next article will focus on how the Government is attempting to provide greater information in protecting personal information held on the register.
If you have any queries about how the proposed changes to Companies House will affect your business, please contact Andrew Meredith on 01689 877081.
Baxter & Co are registered as Auditors in the United Kingdom by the Association of Chartered Certified Accountants.