The Economic Crime and Corporate Transparency Act 2023 (ECCTA) introduced significant reforms to UK company law, aiming to enhance transparency, combat economic crime, and modernise Companies House operations.
For Scottish Small and Medium-sized Enterprises (SMEs), understanding and adapting to these changes is crucial.
What are the key changes affecting Scottish SMEs?
As Companies House seek to remove fraudulent filings, they have increased compliance checks and additional scrutiny on businesses and those who run them.
Companies House have been given a host of new powers and now has increased authority to:
- Query and reject incorrect or fraudulent information
- Impose financial penalties up to £10,000
- Collaborate with enforcement agencies like the Serious Fraud Office
This is coupled with harsher penalties on those found in breach of the new laws.
Missed or inaccurate filings may result in fines, while individuals obstructing investigations may face up to two years in prison.
Companies must maintain a registered office address that is a physical location where documents can be delivered and acknowledged.
PO Boxes are no longer acceptable.
Companies must now provide a registered email address for official communications with Companies House.
This email will not be publicly available, but it is mandatory for filing confirmation statements and incorporating new companies.
The email address should be professional and active, as Companies House may use it to communicate with the company.
Companies are also required to:
- Provide full names of subscribers and shareholders
- Disclose full names of guarantors for companies limited by guarantee
- Submit a one-off summary of all subscribers and shareholders during the first confirmation statement after the relevant provisions come into force
Anyone making filings for a business will need to verify their identity, and the implementation of this is being introduced in stages.
Starting from autumn 2025, all company directors, People with Significant Control (PSCs), and individuals submitting documents to Companies House for the first time must verify their identities within 14 days of appointment.
If you have filed before, you will have 12 months from your most recent filing to verify your identity.
Failure to do so will block you from making any future filings and will jeopardise your business.
Currently, it is possible to voluntarily verify your identity.
It makes sense to do this sooner rather than later, given that all filings will need to be done by a verified individual eventually anyway, so waiting will only cause delays.
Verification can be done directly through Companies House using your GOV.UK One Login.
This is free of charge, and the onus is on the person verifying their identity to provide the correct documentation.
Alternatively, identity can be verified using an Authorised Corporate Service Provider (ACSP).
This is a third party, such as a registered accountant or solicitor, who is authorised by Companies House to act on behalf of companies in terms of verifying identities and making filings.
ACSP addresses can be used in place of a registered office address.
New companies must confirm upon incorporation that they are formed for lawful purposes.
Existing companies must annually affirm that their activities are lawful in their confirmation statements.
Failure to make this declaration will result in penalties and the potential removal of a business from Companies House.
Alongside these changes, the ECCTA aims to simplify filings for small companies and micro-entities.
Small Companies will be required to file a profit and loss account and a directors’ report.
The option to file abridged or ‘filleted’ accounts has been removed.
Meanwhile, micro-entities will be required to file a profit and loss account but may opt out of filing a directors’ report.
As of yet, we do not know exactly when these accounts filing requirements will come into force or whether the filed profit & loss accounts will be visible to members of the public.
If the Registrar decides that the profit & loss accounts should be visible to members of the public, then this is likely to drive a significant behavioural response.
We can expect to see many more micro-entities adopting the micro-entity reporting standard FRS 105, which mandates far less disclosure compared to FRS 102.
Of course, the statutory definition of a ‘micro-entity’ recently changed for financial periods beginning on or after 6 April 2025, meaning that many more companies will now qualify in future to prepare accounts under the micro-entity reporting standard.
These measures aim to improve the integrity of the Companies House register.
How can I stay compliant with these changes?
While the changes are far-reaching and impact most parts of filing with Companies House, they will soon become a standard part of business proceedings.
For now, it is important to keep up with the ongoing changes, particularly as some move from voluntary to mandatory.
There are some practical steps you can take to ensure compliance with the ECCTA.
Reviewing and updating records regularly will ensure that all company records, including director and shareholder information, are accurate and up to date.
You should set up a new email address if your old one is no longer fit for purpose.
You can use a dedicated email address for official communications with Companies House or a standard work email address, so long as it is professional and regularly monitored.
It is important to identify individuals within your company who will need to verify their identities and plan for the verification process.
Take time to understand new filing requirements and ensure your financial reporting aligns with the updated standards.
As always, consulting your accountant is a good way to stay ahead of any current and future changes.
More changes are coming to Companies House in the near future, and we are watching closely to ensure you stay aware.
For instance, any companies claiming audit exemption will eventually need to provide an enhanced statement from their directors on the balance sheet to specify the exemption being claimed and confirm eligibility.
There will be a limit imposed on the number of times a company can shorten its accounting period.
As well as this, software-only filings of accounts will eventually be implemented, although a consultation must first take place.
This is a glimpse of some of the changes coming in the next two to three years.
A clearer picture will be formed with the release of the 2025-2030 strategy later in the year.
