The Economic Crime and Corporate Transparency Act: Key Updates for UK Businesses
The UK business landscape is evolving, and compliance with Companies House regulations has never been more critical. The Economic Crime and Corporate Transparency Act (ECCTA) is a landmark reform aimed at improving corporate transparency, preventing financial misconduct, and strengthening identity verification requirements. If you’re a business owner, director, or corporate service provider, understanding these changes is essential to ensure compliance and avoid penalties.
Key Changes Introduced in March 2024
On 4 March 2024, new requirements came into effect, bringing significant updates to company registration and corporate compliance, including:
Registered Office Address Requirements: All companies must have an ‘appropriate address’ as their registered office.
Registered Email Addresses: Companies must provide and maintain an up-to-date email address for official communications.
Enforcement Actions: Companies House now has stronger enforcement powers, and failing to comply with these requirements may result in penalties or further legal consequences.
New Financial Penalties for Non-Compliance
In October 2024, Companies House will begin issuing financial penalties for non-compliance. These penalties will apply to companies that fail to meet their statutory obligations, such as missing filing deadlines for confirmation statements or other mandatory documents. The introduction of these fines reinforces the government’s commitment to enhancing corporate accountability.
Identity Verification: Preparing for Mandatory Compliance
A key component of the ECCTA is the implementation of mandatory identity verification for individuals setting up, running, owning, or controlling companies in the UK. This measure aims to combat fraud and ensure greater transparency in corporate ownership.
Who Needs to Verify?
New company directors at the time of incorporation.
Existing directors and Persons with Significant Control (PSCs).
Corporate representatives and officers with signing authority.
Verification Process:
Verification will be conducted digitally using GOV.UK One Login or via an Authorised Corporate Service Provider (ACSP).
Individuals must ensure that their details on the Companies House register match their identification documents, or they risk delays and non-compliance penalties.
Failure to comply with identity verification rules will result in criminal offences, financial penalties, and restrictions on business operations.
Registering as an Authorised Corporate Service Provider (ACSP)
Third-party agents, accountants, and corporate service providers who assist businesses with identity verification must register as an Authorised Corporate Service Provider (ACSP). To qualify, they must be supervised by an appropriate Anti-Money Laundering (AML) regulatory body and register their business with Companies House.
Upcoming Changes to Company Accounts Filing
By 31 March 2026, the online accounts and Company Tax Return filing service will be phased out. Businesses will need to transition to filing accounts using approved software. Companies House is providing guidance on software solutions to help businesses adapt before the final transition deadline.
How to Stay Informed and Compliant
With further regulatory changes on the horizon, staying updated is crucial. Businesses can:
Sign up for Companies House email alerts to receive notifications about new regulations.
Review and update company records to ensure all details, including those of directors and PSCs, are correct.
Engage with compliance experts to navigate the complexities of the ECCTA and mitigate risks.
Final Thoughts
The Economic Crime and Corporate Transparency Act represents a significant shift in corporate governance and financial accountability. While the compliance requirements may seem extensive, they serve a vital purpose: creating a more transparent and secure UK business environment. By acting now and preparing for the upcoming changes, businesses can ensure they remain compliant, avoid penalties, and contribute to a more trustworthy corporate landscape.
For professional guidance on ECCTA compliance, feel free to reach out to our team at Driscoll Kingston & Co. We are committed to helping businesses navigate regulatory changes with confidence.