Introduction. From March 2024 Companies House will enact new powers which are provided under the Economic Crime and Corporate Transparency Act. This will result in a number of key changes that UK small business owners and directors need to be aware of.

What is the Economic Crime and Corporate Transparency Act? The Economic Crime and Corporate Transparency Act (ECCTA) is a new piece of legislation which has been Introduced to tackle economic crime and enhance corporate transparency, the Economic Crime and Corporate Transparency Act has a number of important  implications for small business owners and company directors.

How does the ECCTA affect small company directors? Summarised are the key changes expected for UK Small companies:

• Stronger checks on company names. The Registrar will be given powers to reject any names which it believes facilitates crime or suggests a connection with foreign governments or international institutions as well as names containing computer code. This shouldn’t have a huge impact on most company directors but just expect more scrutiny, perhaps stick to traditional company names to avoid issues.

• Appropriate Registered Office. New rules for registered office addresses which will mean all companies must have an appropriate address at all times which means you will not be able to use a PO Box as their registered office address.

• Registered Email. A requirement for all companies to supply a registered email address. This will be provided when you register the company and confirmed annually in the company’s confirmation statement. 

• Lawful Purpose. A requirement for all companies to confirm they’re forming the company for a lawful purpose when they incorporate, confirmed annually via confirmation statement.

• Data Sharing. The Registrar will also now have the power to share data with other government departments and law enforcement agencies if it is believed that a company may be carrying out or facilitating unlawful activity.

• Accuracy of Data. The Registrar will have greater powers to query, scrutinise and reject information that appears to be incorrect or inconsistent with information that is already on the register. In taking steps to clean up the register, Companies House will begin using data matching to identify and remove inaccurate information, and the register will be annotated to let users know of any potential issues with the information which has been supplied.

When do small businesses need to comply? The ECCTA is gradually being rolled out, with phased implementation timelines. The initial changes, summarised above are expected to come into play from 4 March 2024. 

Conclusion. The Economic Crime and Corporate Transparency Act marks a shift in the regulatory environment for UK businesses. Small business owners and company directors must recognise the significance of this legislation and take proactive steps to ensure compliance. Expect to provide more detailed information when you set up a new company or submit your annual confirmation statement after 4 Mar 2024.

Accufy Accounting are property investors too, if you want to be able to talk to your accountant about property and not just numbers then please get in touch.