October 25, 2024 Companies House Updates: Identity Verification & Transition Plan
Introduction
On 16 October, Companies House held an event in Westminster, where its Chair, CEO and others updated the audience on the implementation of the Economic Crime and Corporate Transparency Act 2023 (ECCTA).
The event coincided with the publication of an outline transition plan. Here we summarise what we learned from attending, and the publication, about what to expect and when. There were some important updates from both the transition plan and the event:
- We better understand how Companies House is phasing reforms from now to 2026 and beyond.
- ID Verification (IDV) and ACSP registration are the next focus areas, with Accounts and Limited Partnership reform are not happening until towards the end of the phased plan.
- Over 7 million directors and PSCs will be required to verify their identities as part of a phased process, starting voluntarily in spring 2025 and becoming compulsory from autumn 2025.
Key Updates from the Event
The event brought together senior members of Companies House including Chair, John Clarke, and CEO, Louise Smyth. The Parliamentary Under-Secretary of State at the Department for Business and Trade, Justin Madders MP, also spoke. Here’s what we learned:
- Progress to date: One year on since ECCTA achieved Royal Assent, Companies House is keen to highlight progress made in its ability to remove inaccurate information, maintain appropriate registered office addresses, and conduct more rigorous company name checks.
- Focus shifts to IDV: It was clear from the messaging that Companies House is approaching this project in phases and that, as this first phase concludes, it is gearing up to focus on identity verification.
- A new implementation plan: An implementation timeline was presented which mirrors that contained in the outline transition plan (see below). This timeline has slipped slightly from the one in the Companies House Business Plan 2024 – 2025, which, for example, originally suggested ACSP registration in 2024. Albeit some form of IDV is still due to begin in Spring 2025, as originally planned.
- A little more detail on IDV process: When asked about the technical details of IDV the IDV lead for Companies House noted that this is being worked on and that there will be an effort to take the same approach across governance and adhere to the Good Practice Guide on the subject. Over 7 million people will need to verify their identity under the new requirements which certainly focuses the mind but, as yet, detailed technical guidance as to how this will happen does not extend beyond the relevant draft statutory instrument and draft registrar’s rules which are light on detail.
- Accounts reform to follow: more so than from the transition plan, it became clear that accounts reform is some way off e.g. the requirement for all firms to publish a Profit and Loss account regardless of size.
- Companies House 2025-2030 plan: The event concluded with a discussion of the strategy that Companies House will adopt over the next five-year period from 2025 to 2030 which will be published by Companies House in due course. However, the direction of travel remains more enforcement, greater transparency, and making the register more accurate and reliable and therefore more useful.
The Outline Transition Plan
Published on gov.uk on the same day as the event, the outline transition plan highlights the large and complex nature of the changes and confirms that a phased approach is being adopted.
Companies House has not published a firm timetable for implementation of all measures because some require secondary legislation which is dependent upon the Parliamentary timetable. Some 50 statutory instruments will be used to roll out the reforms through to 2027.
The key dates in respect of IDV and ACSPs are set out below.
- By spring 2025 -Companies House should be able to carry out checks on ACSPs to authorise them to carry out verification services and allow individuals to voluntarily verify their identity.
- By autumn 2025 – Companies House should be able to make identity verification a compulsory part of incorporation and new appointments for new directors and PSCs and begin the 12-month transition phase to require more than 7 million existing directors and PSCs to verify their identity which will happen as part of the annual confirmation statement filing.
- By spring 2026 -Companies House should be able to make IDV of the presenters a compulsory part of filing any document and require third-party agents filing on behalf of companies to be registered as an ACSP.
- By the end of 2026 – Companies House should be able to complete the transition period for all individuals on the register requiring IDV and start compliance activity against those who have failed to verify their identity.
- Beyond – In respect of some other areas of reform, the outline plan notes that the reforms to Limited Partnerships will be introduced in 2026 and that the reforms to accounts and corporate directors will follow thereafter from 2027 onwards.
Conclusion
It is clear that Companies House has a great deal of work to do to implement these changes. The Registrar is recruiting new staff all the time having recently doubled in size.
These reforms also come hot on the heels of the implementation of the Register of Overseas Entities which demanded, and still demands, significant investment in terms of time and resources.
Some of the timings have slipped slightly from the Business Plan presented in August, however, a commitment to making IDV available from Spring 2025 remains. Companies would be well advised to keep abreast of the timelines and the requirements of the reforms as they approach. If any of our clients or partner firms would like to speak to us about how we can help, please get in touch.
