Economic Crime and Corporate Transparency Act 2023

14 December 2023 - Steven Burgess

Back in July 2022 we wrote how legislation had been drafted as part of the government’s strategy to combat economic crime.  The Economic Crime and Corporate Transparency Act 2023 became law on 26 October 2023. Steven Burgess, Audit Partner explores some of the significant changes introduced below.

Companies House

New laws are introduced with a view to improving the information on the register.  Companies House will be empowered to check, remove or decline information submitted to, or already on, the Companies register through the introduction of better cross-checking of data with other bodies.  Other changes include the introduction of identity verification for new and existing registered company directors and people with significant control.

Small company filing requirements

Perhaps the most significant change affects 5 million+ small companies which will now be required to file their income statement (profit and loss account) with Companies House together with their directors’ report; the option of filing ‘filleted’ accounts is removed.  Micro entities will also be required to file their income statement.

Register of Overseas Entities

The Register of Overseas Entities came into force on 1 August 2022 and forms a key part of the government’s strategy to tackle global economic crime.  It requires overseas entities that own UK property or land to declare their beneficial owners or managing officers.  Overseas entities cannot buy, sell, transfer, lease, or raise a charge against land in the UK unless they’ve registered with Companies House.  All entities on the register must file an update statement every year to confirm the information held is correct, even if nothing has changed.  Entities may face prosecution or a financial penalty if they do not file.

Failure to Prevent Fraud

A new Failure to Prevent Fraud offence is created to hold large organisations to account if they profit from fraud committed by their employees, where they did not have reasonable fraud prevention procedures in place. This means that prosecutors will no longer have to show that the ‘directing mind and will’ of a company were involved in the fraud.

The new failure to prevent fraud legislation will be applicable to large organisations and partnerships where two of the following criteria are met

  • more than 250 employees
  • more than GPB36 million turnover
  • more than GBP18m in total assets.

The majority of the measures outlined will be implemented through secondary legislation, the timing of which is, as yet, unclear.  Please reach out to your usual Scrutton Bland contact or Steven by calling 0330 058 6559 or emailing hello@scruttonbland.co.uk for further information on the Economic Crime and Corporate Transparency Act 2023.

 

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