Are you ready for the changes to small business legislation?

Are you ready for the changes to small business legislation?

Identifying your Persons with Significant Control and preparing a Confirmation Statement

As a small business, you’re no doubt fed up with the ever-changing nature of business legislation. But the Small Business, Enterprise and Employment Act is a change in the law that you really do need to pay attention to, as it’s going to have a significant effect on how you meet your legal and financial requirements.

The Act came into law back in March 2015, with a three-point aim of:

  • Improving access to finance and prompt payment reporting by small businesses.
  • Increasing corporate transparency around who’s in control of small businesses.
  • Making the process of insolvency and creditor meetings more effective.
  • If the idea of this doesn’t set your world on fire (and frankly we can understand why it might not), then here’s the reason you need to pay attention.

    As part of the Act coming into law, you have two new obligations as a small business:

  • You must identify the Persons with Significant Control (PSC) in your business.
  • You must submit a ‘confirmation statement’ each year to replace the previous requirement for an annual return.
  • Paying attention now?

    Good. Let’s look at both of these requirements in turn.

    Persons with Significant Control

    Are you a UK limited company or limited liability partnerships (LLP)? If so, from April 2016, you’re going to have to keep a register of the ‘Persons with Significant Control (PSC) in your business.

    What makes someone in the business a PSC?

    A PSC is anyone in your company or LLP who meets one or more of the conditions listed below. This is a person or legal entity who:

  • owns more than 25% of the company’s shares
  • holds more than 25% of the company’s voting rights
  • holds the right to appoint or remove the majority of the board of company directors
  • otherwise has the right to exercise, or actually exercises significant influence or control
  • has the right to exercise significant influence or control over the activities of a trust or firm which in turn meets any of the four conditions above.
  • One of the main reasons behind this change is to improve transparency around who owns and controls UK businesses. There’s also the aim of improving the UK’s reputation as a fair place to do business.
    You can find out more information and guidance on PSCs here

    Confirmation Statement – ‘Check and Confirm’

    The new Act also brings in the need to file a ‘confirmation statement’ – replacing your requirement to file an annual return.

    At present, you have to file a return annually with the Registrar of Companies giving detailed information about your company, shareholders, directors and share capital. But, in many cases, this simply duplicates information that’s already been filed in previous years or event-driven filings throughout the year.

    The new confirmation statement replaces the annual return from June 2016. And its chief aim is remove that requirement to file duplicate information about the company. Instead, you’ll confirm that all the right information has either been delivered to the Registrar as required during the year, or is being delivered with the confirmation statement.

    Unlike the annual return, there’s no set date each year on which the confirmation statement needs to be made. It can be made at any time, although there can’t be more than 12 months between each confirmation statement.

    This rolling 12-month window means that you can combine making your confirmation statement with another filing at any point during the year – making your company admin a whole lot easier.

    Getting ready for these changes

    With April just around the corner, there’s a certain imperative to get your business ready for the PSC requirements and get up to speed on the confirmation statement changes.

    At Caplan Associates, our philosophy is always to help our clients deal with changes in legislation swiftly and effectively – the sooner you act, the more time you have to deal with any new regulatory requirements, after all.

    If you want to know more about registering your company’s PSCs, or the impact of the move from annual returns to confirmation statements, please do get in touch to arrange a catch-up. We’d love to help your business meet these new requirements.