UK to Tighten Corporate Transparency Rules

The UK government is taking strong action to combat financial crime with new rules designed to improve business transparency. The changes, introduced under the Economic Crime and Corporate Transparency Act (ECCTA), will determine how companies operate and file documents with Companies House.

What Are the New Rules to Improve Corporate Transparency?

All new companies must confirm they are set up for a legal purpose. Existing companies will also need to provide this confirmation when submitting their annual reports. The new rules are designed to stop misuse of the corporate system and promote accountability.

Businesses will also now need to provide a registered email address and have a valid registered office address where official documents can be sent. This means companies can no longer use a P.O. Box as their official address.

Limited Partnerships will also gradually need to follow these new requirements. This means they will also be required to have a proper UK registered office address. This can be the registered office of its Authorised Corporate Services Provider (ACSP).

The process to register as an ACSP will begin in spring 2025. To be an ACSP, an agent must be supervised by an anti-money laundering supervisory body like the HMRC, the Financial Conduct Authority or the Gambling Commission. Individuals, sole traders or companies not already registered with Companies House will also have to register as ACSPs to file documents.

Identity Verification Coming Soon

However, the biggest change coming is the new identity verification rule for company directors, owners and major controllers. Companies House is setting up a system to verify their identities using technology like facial recognition. While identity checks will be optional until spring 2025, they will become required for new companies and director appointments by autumn 2025.

Existing companies will have a grace period and will need to verify the identities of their directors and key controllers when they file their next confirmation statement. The changes will also apply to limited partnerships starting in 2026.

What Does This Mean for UK Companies?

Companies don’t need to take immediate action to comply with the ECCTA measures, but they should start getting ready. Companies should know that verification checks, like ID document validations, may expire after a few months.

Conclusion

The ECCTA reforms are designed to improve transparency and fight financial crime in the UK to boost the country’s reputation as a safe place to do business. For businesses in the UK, it is a good time to review governance practices and prepare for the upcoming changes.