The Economic Crime and Corporate Transparency Act 2023 – Update

Since our last blog on The Economic Crime and Corporate Transparency Act 2023, we have had two statutory instruments which bring provisions of the act into force, with the most recent having come into effect on 4 March 2024.

In this blog, we take a brief look at what’s now in place and what’s left to come.

Key changes

One of the most significant changes introduced from 4 March is a significant increase in powers for Companies House to query information and request supporting evidence which the government feels will aid in tackling economic crime and improving transparency over corporate entities.

Companies House will also be able to take steps to use data matching and have the ability to remove inaccurate information, as well as the ability to share data more widely with other government departments and law enforcement agencies.

When companies are formed, there will be stronger checks on company names and a requirement to confirm that the company is being formed for a lawful purpose. The identify of proposed directors will also need to be verified (either directly via Companies House or through an Authorised Corporate Services Provider).

There are stricter rules on registered office addresses, with the use of PO boxes now prohibited and (via the Registered Office Address (Rectification of Register) Regulations 2024) the introduction of a criminal offence where Companies House changes a registered office address to a default address (e.g. where the existing address is inappropriate) and it is not updated by the company within 28 days.

All companies will now be required to supply a registered email address, and will also have to confirm the intended future activities of the company will be lawful on each confirmation statement they submit from now on. Existing directors will also be required to have their identity verified, although there are transitional provisions which apply, so it is not an immediate requirement.

To deal with the extra workload, Companies House has now announced increases to its fees from 1 May 2024.

What’s left to come

Perhaps what will be the most notable changes will be those to small company accounting and reporting.

Whilst we don’t yet have a date for commencement of these particular changes, we do know that the option for small companies to abridge their accounts will be removed, and they will be required to file their profit and loss accounts and directors reports.

Micro companies will also have to file their profit and loss account, but will still not be required to either prepare or file a director's report.

How can Mercia help?

Mercia will follow the commencement of the rest of the Economic Crime and Corporate Transparency Act as further provisions come into effect. Our training and methodology will be updated to reflect revised requirements and our experts will be on hand to answer technical queries too.