Hi

The Economic Crime and Corporate Transparency Act, which has been making headlines over the past year, is now firmly on the radar for small business owners. While much of the commentary has focused on large corporations, the reality is that these new regulations will have a direct impact on small and medium-sized businesses across the UK.

Why Was This Act Introduced?

Economic crime—such as fraud, money laundering, and false accounting—has long been a concern for UK regulators. The Act aims to address these issues by introducing stricter reporting requirements, enhanced identity verification, and greater transparency in company ownership. For small businesses, this means increased scrutiny and the need for more robust compliance processes.

Key Changes Affecting Small Businesses

• Identity Verification: All company directors, persons with significant control (PSCs), and those filing information with Companies House must now verify their identity. This is a significant shift, designed to prevent the use of false or stolen identities in company formation and filings.
• Greater Transparency: Companies House will have enhanced powers to query and challenge information submitted to the register. Expect more rigorous checks on your filings and faster action on discrepancies.
• Stricter Filing Requirements: The Act introduces new requirements for the format and content of annual accounts and confirmation statements. Small businesses will need to ensure their submissions are accurate and up to date, as errors are more likely to be flagged and investigated.
• Increased Penalties: Non-compliance with these new rules can result in substantial fines and, in some cases, criminal liability for directors and officers.

What Should Small Businesses Do Now?

• Review Your Company Records: Ensure that all information held by Companies House is accurate and current. Pay special attention to the details of directors and PSCs, as these will be under greater scrutiny.
• Prepare for Identity Verification: If you or your fellow directors haven’t already, be ready to provide documentation to verify your identity when prompted by Companies House.
• Update Your Filing Processes: Work with your accountant to understand how the new requirements affect your annual accounts and confirmation statements. Using cloud accounting software, such as those recommended in our services overview, can streamline compliance and reduce the risk of errors.
• Stay Informed: This is not a one-off change. The government will continue to update and tighten regulations in the coming years. Subscribe to our blog for ongoing updates and practical advice.

Turning Compliance into an Opportunity

While regulatory changes can feel burdensome, they also present an opportunity to review—and improve—your business processes. By adopting robust digital record-keeping and working closely with your accountant, you can ensure compliance and potentially gain clearer insights into your business performance. At Guilford Accounting, we support clients with cloud-based solutions, regular management reporting, and hands-on advice to help you stay ahead of regulatory changes and focus on growth.

If you’re unsure how these changes affect your business, or if you need help updating your processes, you can explore our accounting and advisory services or reach out to me to discuss your specific situation.

To your success,

Noel Guilford