21st November 2023
On 26 October 2023 the Economic Crime and Corporate Transparency Act 2023 received Royal Assent having first been presented in Autumn 2022. This piece of legislation increases powers for tackling financial crime and illicit activity, while also reforming the operations and powers of Companies House. Its broad purpose is to reduce financial crime and improve transparency of UK companies, ultimately preventing the use of companies for money laundering and other illicit purposes, but it will have an impact on all Limited companies whether illicit or not.
The most significant change, that we see impacting our clients, is to the filing requirements for smaller companies’ financial statements. Small entities* will no longer be able to file “filleted” accounts and so will have to file both the Profit and Loss account and Directors’ Report at Companies House, while Micro-Entities* will need to file their P&Ls.
Despite strong lobbying from small business groups over the commercial sensitivity of sharing profit and loss accounts, the requirement to file these has remained. There was a final amendment which leaves provision for Companies House to make these sensitive pages unavailable for public inspection, though whether, and how, that is applied in the final application is yet to be seen. The Government believe that this increased accountability will lead to a reduction in financial crime, as it will be much harder to hide illicit activity within a company’s financial statements.
As yet there is no timetable for when the application of this legislation will be brought into force.
Other key changes include:
The Economic Crime and Corporate Transparency Act 2023 is a much-needed piece of legislation in combatting the use of the UK corporate system in committing financial crime. It will ensure that companies are held accountable for their actions, while also providing Companies House with the enhanced powers needed to combat these risks. We remain hopeful that the provision to exclude sensitive business data from public access will be enacted in the roll out of these measures.
If you have any questions about these changes or any other matters please do not hesitate to get in touch with a member of our team.
|*Any two of:|
|Turnover||Employee head count||Gross assets|
Please note, Thompson Jenner will be closed for Christmas from 5:15pm on 22nd December, opening again for the new year on 2nd January.