How the Economic Crime and Corporate Transparency Act Will Reshape Companies House Operations

The Economic Crime and Corporate Transparency Act (ECCTA) 2023 provides the framework for huge changes at Companies House that will transform the way it works and change the face of corporate Britain. 

This act will set a new standard in the fight against economic crime, extend corporate transparency and push further accountability on businesses operating in the UK economy. Let’s take a look at exactly how this act will reshape Companies House operations

A New Era in Corporate Transparency

Companies House is changing, as it must, to make sure that it remains valuable as a repository for all company information at the very centre of the UK economy. As will be discussed throughout this article, the changes this act will usher represent so much more than mere administrative updates. They reflect an enhanced commitment toward better corporate accountability.

The introduction of this act comes at a time when money laundering and other financial crimes, such as fraud, have acquired an international dimension and there is growing coordination in combating them. With increased reporting and checks, the government hopes to shut down any opportunity for crime to operate under the cloak of corporate arrangements.

The Act and Its Role

The ECCTA grants Companies House expanded powers to combat economic crime and foster economic growth. The reforms aim to enhance transparency and ensure more accurate and trustworthy information on company registers. These comprehensive changes will be introduced in phases over several years, with associated costs covered by increased Companies House fees, which were updated on 1 May 2024.

Key responsibilities will apply to new and existing company directors, persons with significant control (PSCs) and individuals submitting company information. The reforms include initiatives to clean existing registers and scrutinise new submissions, which began on 4 March 2024. Over time, incorrect or fraudulent entries will be prioritised for removal, with processes regularly refined through testing and monitoring.

One of the most significant aspects is the introduction of identity verification, impacting over 7 million individuals. By spring 2025, Trust and Company Service Providers (TCSPs) and other Anti-Money Laundering-registered professionals, such as accountants and solicitors, will be able to register as Authorised Corporate Service Providers (ACSPs) to perform verification services for clients. From autumn 2025, all directors and PSCs will need to verify their identities during new incorporations, with a 12-month transition period for existing companies tied to their confirmation statement schedule.

Further changes include reforms to limited partnerships (LPs), expected no earlier than spring 2026, which aim to make their information more transparent. Additionally, increased disclosure of shareholder information will bolster ownership transparency, with Companies House currently exploring implementation strategies.

Another significant reform involves requiring all company accounts to be submitted via software. While a formal commencement timeline has not yet been set, Companies House will provide adequate notice to ensure businesses are prepared for this transition.

These reforms collectively mark a transformative shift in Companies House operations, strengthening its ability to support transparency and tackle economic crime effectively.

How Companies House Will Adapt

The extensive changes introduced by the ECCTA present a significant challenge, but Companies House is well-prepared to implement them efficiently thanks to its ongoing transformation programme. Despite this readiness, the technical and operational complexity of the reforms demands continued collaboration with expert stakeholders.

A definitive timeline for implementing all measures remains uncertain, as many require secondary legislation. Approximately 50 statutory instruments will be introduced over 18 months, with transitional periods extending until full implementation in 2027. Progress will depend on the availability of Parliamentary time in both Houses and will be closely monitored.

While the urgency of these reforms is acknowledged, unforeseen challenges may necessitate adjustments to timelines. Developing sophisticated systems and services to ensure the legislation's integrity and effectiveness could lead to changes in planning and delivery schedules.

Companies House is committed to transparency throughout this process and will update stakeholders regularly as planning assumptions evolve.

What Businesses Should Know

The introduction of the ECCTA serves as a call to action for businesses operating in the UK. Here are some of the necessary steps companies are to take to prepare for the change: 

• Verification and Update of Information - Make sure all the company details, including ownership and control information, are accurate and up to date. This will help avoid penalties or delays in compliance.
• Understand the New Reporting Requirements - Get familiarised with new obligations imposed by this act, including identification verification and notice filing on a timely basis.
• Invest in Compliance Tools - Avail yourself of digital platforms and software to handle corporate filings to ensure compliance with the new law.
• Seek Professional Advice - The best way to sail through these reforms with minimum risk is to engage an accountant or a lawyer.

Conclusion: A Leap Towards Increased Corporate Accountability

The ECCTA will usher in an exciting new phase in the development of corporate governance here in the United Kingdom. Primarily, these reforms follow the twin tracks of improved quality of information with increased transparency and strengthening Companies House.

The message to be taken by business is simple: compliance is not optional anymore; it forms the very grain of doing business in the United Kingdom. However, by preparing for this now and embracing these changes, companies are well-placed to position themselves as leaders in ethical and transparent business practices.