A new chapter in the long history of Companies House
Monday, July 1, 2019
In excess of 4 million limited companies are registered in the UK and 500,000 new enterprises are incorporated each year – with a new business starting every 75 seconds!
In excess of 4 million limited companies are registered in the UK and 500,000 new enterprises are incorporated each year – with a new business starting every 75 seconds! Companies House has been the official register of British businesses since its creation in 1844. Now, some 175 years later, it is undergoing a renaissance; a shake up that will give the organisation greater powers and ensure it is fighting fit for the future.
Companies House is the UK’s official body responsible for incorporating and dissolving limited companies, examining and storing company information, and making it available to the public. The Government published plans to make significant changes to Companies House within its consultation on corporate transparency and register reform in May. This was followed by a consultation period to source feedback, which closed last month.
The reforms centre largely on improving transparency and truth, both in terms of the information Companies House holds and publishes, and what it knows of the individuals setting up and controlling businesses. Additionally, Companies House wants to become more than merely a record holder, seeking new powers to assess and act on incorrect information.
The Government’s vision – all part of the Industrial Strategy – is for the UK to be the best place to start and grow a business, with an open and attractive business environment a vital component. It says the strength of the business environment is founded on our regulatory frameworks, “a key element of which are those governing corporate entities.” And that “transparency and accountability over the use of corporate entities are essential to give business, investors and society confidence.” Consequently, transparency and accountability feature heavily in the new-look Companies House.
An important area of the reform is increasing what Companies House knows about the individuals setting up, controlling and running companies, to ensure there is far more visibility and verification. This will include more identity checks, monitoring who can submit or see data, requiring more information on those governing businesses, and limiting the extent of directorships held.
Another core focus will be the accuracy and usability of data. There is a desire for better quality information stored and shared on the register – and Companies House wants to be able to remove anything it deems erroneous. This also extends to accounts submitted; the Government wants a more uniform format for filing accounts, to enable easier automated checks and better analysis.
It has also been identified that the shortening of accounting reference periods is open to being manipulated and abused, possibly to conceal a firm’s financial difficulties or – in some instances –
to mask fraudulent activity. Watch this space as HMRC investigates it further; changes to submission requirements may be on the horizon.
In her Ministerial foreword in the reform documentation, the Minister for Small Business, Consumers and Corporate Responsibility, says the UK is “recognised as a global leader on corporate transparency”, yet some factions have found ways to abuse the system, filing false information with Companies House, misusing data on the register, and using it to facilitate economic crime. A more robust role is needed to protect businesses and prevent economic crime. A significant element of the reforms seeks to root out the rogue criminal few, with “minimum impact on the many.”
Some shifts have already begun, with the adoption of a transformation programme at Companies House, which centres around having the right staff and systems in place, and offering the best services. It has been a long time coming to this elderly-statesman of an organisation, but change is afoot now. Should the proposals outlined here all proceed, we will witness the biggest development to the UK’s company registration framework in its history – and the impact will surely be felt by the business community in the years to come.