Companies House reforms – incoming changes in late 2024

26 September 2024 - Since the introduction of the Economic Crime and Corporate Transparency Act 2023, Companies House has been hard at work rolling out a package of reforms to align with the UK Government’s legislative roadmap to increase transparency and to ensure companies are being used for legitimate purposes.

It is expected that a number of incoming changes, some of which are listed below, will be implemented with more specific details and guidelines to follow.

Identity verification

Companies House will be introducing a new identity verification process. This will require anyone setting up, running, owning or controlling a company in the UK to verify their identity directly with Companies House, in order to prove they are who they claim to be.

• For new companies – all directors and people with significant control (PSCs) will need to complete identity verification.
• For existing companies – all directors, or equivalent, and PSCs will have a transition period to verify their identity with Companies House.
• Anyone acting on behalf of a company – i.e., Authorized Corporate Service Providers (ACSPs) otherwise known as authorized agents – will also need to verify their identity before they can file information with Companies House.

In support of this new change, Companies House will implement a service for individuals to verify their identity using ID documents, complete with a range of supporting services to help complete this process.

Identity verification checks conducted by authorized agents must meet the same level of assurance as those who verify themselves directly with Companies House so the process will build on existing anti-money laundering and due diligence checks.

It is anticipated that in the coming months Companies House will provide further guidance on how the new identity verification process will work in practice. Therefore, no action is required at this point in time.

Filing accounts by software only

Companies House has also made a strategic commitment to become a fully digital filing service, therefore bringing the UK in line with international best practice. Even though Companies House has calculated that more than 65% of UK companies already use software filing as their preferred method, this change will see a transition for those who currently choose web-based and paper filing options towards a model whereby 100% of companies will file their annual accounts by software only.

The aim here is to improve the quality of data retained in the register, whilst enabling a more efficient and secure way for companies to make their filings.

To comply with this change, all companies will need to find suitable software, which supports the iXBRL format (the Companies House website publishes a list of tested software which are already in use). This will apply to directors who file accounts themselves, and to companies who use third party agents or accountants to file their annual accounts.

The transition to filing accounts by software only will be phased in over the next two to three years, and Companies House will share a timetable of the roll-out in due course.

Small company filings

Companies House will also be simplifying its framework when it comes to the accounts filing options available to small and micro-entity companies. Under the new framework, all small companies, including micro-entities, will be required to file their profit and loss accounts. Further to this, the option for filing abridged accounts will be removed. The details of what the filings will need to include will be set out in secondary legislation down the line.

Claiming audit exemption

For companies looking to claim an audit exemption, there will be a new requirement to provide an additional statement from their directors on the balance sheet. As part of this process, directors will be required to specify which exemption is being claimed, in addition to having to confirm that the company qualifies for the exemption.

We will continue to monitor for further updates and assist our clients as they navigate these incoming changes to UK company law.