The Importance of Getting your House in Order

Running a company imposes an abundance of filing obligations, those of common knowledge include accounts and company tax returns. However, there are also additional filing requirements that are often overlooked / incorrectly inputted despite the fact that omission / inaccuracy of these filing requirements can lead to fines and implications down the line. This article will highlight some of these filing obligations and the implications of failing to comply with these obligations. The Confirmation Statement The confirmation statement (annual return) is essentially just a check that the information Companies House has about a company is correct every year. Every company is required to submit one, including non-trading / dormant companies. A company’s first confirmation statement must be submitted within 14 days of the anniversary of company incorporation. Thereafter, a confirmation statement must be delivered at least once a year up to a year after the previous one. It is the directors’ and company secretary’s responsibility to file the confirmation statement. Information to include on the confirmation statement if applicable:

1. Details of the company’s registered office, directors, secretary, and the address where the company keeps its records (if different to the registered office).
2. The statement of capital and shareholder information.
3. The Standard Industrial Classification (SIC) code.
4. The register of persons of significant control (PSC).

If all the aforementioned information is already available and there has been no activity in the year it is permittable for the confirmation statement to just confirm what is already filed without having to reiterate it. As outlined below, a confirmation statement is mostly not the place to report company activities. Instead, this information should be reported to Companies House using the set procedure prior to or at the same time of submission of the confirmation statement. On the other hand, the exception to the rules are SIC codes, shareholder details, and paid-up share capital which can be reported via the confirmation statement. Despite this simple fact checking requirement, many confirmation statements are filed late or not at all. Failure to file confirmation statement is a criminal offence which can result in directors being personally fined and the company being struck off. SIC Codes SIC codes are five-digit codes that group companies by their primary business activities. They are required to be entered on incorporation, confirmation statements, and if the company is registering for VAT. Although SIC codes are relatively straight forward, a common mistake made by business owners is the selection of a SIC code which represents a dormant company rather than a holding company, despite the fact there is the option to select a holding company. Distinguishing between these two companies is crucial as there are different compliance obligations for dormant companies. PSC A PSC is essentially someone who owns or controls a company. To classify as a PSC a person must satisfy one or more of 5 conditions. The majority of PSC are those who hold:

• More than 25% of shares in the company.
• More than 25% of voting rights in the company.
• The right to appoint or remove the majority of the board of directors.

To ensure corporate transparency, it is paramount that a company director / secretary records any PSC when the company is incorporated and also keeps a PSC register. This register must be kept at the company’s registered office or single alternative inspection location. Any changes to PSC must be recorded on the register within 14 days. Companies House must then be informed of these changes within 14 days of updating the register. PSC must also be recorded on the confirmation statement because as explained above confirmation statements confirms information about your company. Failure to comply with these aforementioned requirements is a criminal offence which could result in a personal fine and/or imprisonment. Notification of Appointing a Director Primarily, a company’s first directors are appointed during incorporation as a company cannot be formed without any directors. These directors therefore should be the first entries on the register of directors. Appointing a new director subsequent to incorporation then requires direct Companies House notification using the relevant forms within 14 days of the appointment. These forms differ dependent on whether the director is an individual or a corporate director. In addition, you must also update your register of directors. Moreover, it is recommended that you notify an appointment of a director as soon as possible, as being an employee or office holder of a company is one of the requirements of the widely claimed Business Asset Disposal Relief (formerly Entrepreneurs’ Relief). We have recently started offering companies compliance services, therefore, for help with any of the above, please contact a member of our team.