The Economic Crime and Corporate Transparency Act was passed on October 26th 2023 with the intention of combating economic crime. This will have direct implications for businesses in the UK, who may need to make alterations to their filing processes and account preparation. In this article, we’ll examine the changes to help businesses understand what they need to do in order to remain compliant.
What business owners need to know:
- Companies House powers to combat fraud
The legislation grants Companies House the authority to have a more significant impact on combatting fraud and implementing measures that enhance the reliability and clarity of data on the registry. Some of the initial measures that will be enforced are identity verification procedures for both new and current registered directors of companies, increased abilities to scrutinize data and conduct thorough screenings of company names, and enhanced investigation and enforcement powers.
2. Failure to stop fraudulent activities
The Act has introduced a new Failure to Prevent Fraud charge that aims to hold companies accountable for any fraudulent activities carried out by their employees. According to this new offence, larger companies can be held liable if their employees or agents commit a specified fraud offence and the company did not have adequate fraud prevention measures in place. Further details and resources related to this aspect of the Act can be found on ICAEW’s Economic Crime hub.
3. Profit and Loss detail to be filed at Companies House
The choice to prepare and submit abridged accounts will no longer be available for small businesses. Instead, they must submit their profit and loss account and directors’ report. Micro-entities must also submit their profit and loss account, but have the choice to not prepare or submit a directors’ report. The Act mandates that small and micro companies will submit their profit and loss statement. However, it is not certain that this information will be made accessible to the public. This provision is currently under review.
4. Statement on exempting audits
Directors who wish to be exempt from audit must now include a statement on the balance sheet indicating their intention. The statement must specify the type of exemption being claimed and includes verification that the company is eligible for an exemption.
5. No more paper filing at Companies House
According to the Act, the Registrar now has the power to request electronic delivery of documents, and these requests must comply with the Registrar’s regulations. This change allows for a faster implementation of electronic filing. The transition to exclusively using software for filing is projected to occur gradually within the next two to three years.
For more information on the above, please visit the government website through this link . At Bracey’s we’re committed to providing the best accountancy and tax advice to our clients. If you’d like to book a free consultation, please follow this link .
