Proposals to reduce burdensome company filing requirements for the UK's 3.2 million companies, and improve the accuracy of the information supplied to government, have been announced by Business Minister Jo Swinson.
In a consultation document published today, government aims to reduce the amount of information that companies need to file and the frequency that it is sent to Companies House. Under Company Law, companies are required to send in certain details ranging from basic information such as the address of the company, through to more detailed information on the ownership and financial position.
A key proposal is the suggested removal of the requirement to complete a mandatory annual return – the basic details on a company, such as the business address, type, names of directors and information about shareholders and shares. Every company submits these and under the plans they could instead either digitally confirm each year that the information held by Companies House is simply correct or update it as and when it changes.
This would cut the time and money that businesses spent filing these forms, especially benefiting small and medium sized businesses (SMEs) whose details generally remain the same but nevertheless have to file information each year. This could also help reduce the amount of fees companies pay to agents to help them file this information.
The document also asks whether the return could still be retained, but better aligned with the filing requirements for the annual accounts which show the performance of the company in the latest financial year.
Business Minister Jo Swinson said:
"Cutting unnecessary bureaucracy and red tape for businesses will help build a stronger economy. It is only right that as well as doing this we also make sure that the information available on a company is accurate and transparent.
"We're taking steps that will mean that businesses, pushed for time and money, are not simply filing paperwork for the sake of it. This will mean companies can concentrate on growing their business and creating jobs."
The proposals follow the Red Tape Challenge on Company and Commercial Law. Also included in the plans are measures to:
• make it easier to jointly file annual accounts to Companies House and HMRC by improving the online filing system for Companies House
• reduce form filling for companies with the removal of the 'consent to act' note sent to Companies House when a director is appointed. Companies would only need to confirm it holds such consent and would only need to provide such material in the event of a dispute or legal proceedings
• allow companies the option of holding their register of directors and shareholders at Companies House
• reduce the time it takes for a company to be struck off the register at Companies House in specific circumstances. Currently this takes roughly 6 months – under the proposals this could now take as little as 6 weeks
• require companies to provide a demonstrable link with their registered office in the event of a complaint, to help tackle the issue of fraudulent use of an address
• conceal all or some of the date of birth of a director listed at Companies House to help tackle identity theft
• improve communication with companies by requesting that when a company is set up they supply an email address to the Companies House and keep it up to date
• improve the reporting of company subsidiaries. Proposals suggest either companies reporting their total number of subsidiaries or at least reporting these in 1 return. Currently some companies only disclose information on their primary subsidiaries if the information is too extensive
"The register of UK companies at Companies House plays a crucial role in the functioning of the UK corporate sector. However, it is important that filing requirements do not create an excessive bureaucratic burden for the many small companies that lack significant in-house staff and resources. Companies House is right to consider ways in which this burden can be minimised, particularly through the greater use of digital access and communication. More generally, the IoD welcomes this opportunity to share views on how the company register can remain fit for purpose in a rapidly evolving business environment."
Danielle Stewart OBE, Company and Commercial Red Tape Challenge Champion and is Head of Financial Reporting at Baker Tilly said:
"I am delighted with the Red Tape Challenge's Consultation Document on Company Filing Requirements. The changes proposed are well thought out, helpful, deregulatory and practical. I am particularly excited by the way that the proposals achieve a material reduction in work for companies without any noticeable reduction in information available to the public, by removing duplication and making best use of technology."
The consultation will run until 22 November.