As soon as Louise Smyth joined Companies House three years ago, transformation was at the top of the agenda. “Important decisions are made by all sorts of people based on the information we hold. One of the things I wanted to do is make Companies House’s place in the economy clear for everyone,” she says. “But I also wanted to look at how we can improve our systems, processes and the services we offer, because the better we are, the better the information that's out there.”
For her, transformation is about connecting people, systems and services. “These are the three elements we have to improve. Our services are good, but like many government departments there's a lot of legacy in the processes,” she says.
“Reform is really exciting. We were being criticised for certain things and I agreed with some of that criticism,” she adds, citing by way of example the misuse of personal addresses and the appointment of directors without their knowledge. But criticism for not taking action, she says, is unfounded because significant reform is now planned. This transformation will be informed by the outcome of three Companies House consultations. These consultations – now closed – relate to:
- Improving the quality and value of financial information available on the UK companies register in the consultation - Corporate transparency and register reform: improving the quality and value of financial information on the UK companies register
- New powers for Companies House to query, remove and amend information on the public register in the consultation - Corporate transparency and register reform: powers of the registrar
- A new set of principles to limit corporate director appointments in the consultation - Corporate transparency and register reform: implementing the ban on corporate directors.
The outcome of these consultations and the ensuing reform offer an exciting opportunity for Companies House to change. “One of our main aims is to make sure we've got good data on the register,” she says. “We need the right data in the right place at the right time. This is fundamental to ensuring we drive confidence in the UK economy, which is our purpose. And people need to have confidence in that data.”
The first consultation aims to achieve four things:
- Determine how companies might, in future, be able to file accounts only once with government, instead of separately to Companies House, HMRC and other agencies
- Determine the filing options available to small companies with the aim of achieving a better balance between minimising burdens and ensuring the information provided is valuable
- Address the proposal that all companies should file accounts digitally with Companies House
- Address the additional checks Companies House could carry out on accounts filings.
Reducing the filing burden
Filing once is important to Louise – she is mindful of the need to reduce the filing burden on directors. This means using the same data for different purposes. “The challenge is always going to be trying to work across governmental organisations. People will always have slightly different requirements and needs, and there will always be different ways of working,” she says.
For example, at present it is possible to file corporate information to HMRC and Companies House on the same day with different figures. Under the proposed reforms, if information is only filed once, each government department would only be able to access the information they are legally entitled to access. “For example, if HMRC requires more information than we do, we would get a subset of that. We would not ask directors for more information than we're legally entitled to, or that we need for our purposes,” she says. “It’s going to be a challenge to define what the need is and make sure that we respond correctly.”
The proposals in the first consultation also ask about the mandatory tagging of accounts. Does it make sense for the tags to be consistent with those already required by HMRC? And will there be sanctions for those not filing fully tagged accounts?
She responds: “The question around sanctions has not been developed yet, but if it were a legal requirement, we would expect companies to comply. But we don't know what's going to come out of the government response to those consultations in relation to sanctions. However, we will align with HMRC in terms of tagging requirements. There must be consistency across what we're asking people to do.”
While Louise confirms that what Companies House is seeking to implement will be along the same lines as HMRC’s existing system, she also says there will be some compliance checks, to a degree, but within a framework. “We will align the initial validation checks made before the information can get through the initial gateway but discussions about any further validation are ongoing.,” she says, pointing out that most companies are already using the software that automatically performs the tagging function.
Nothing will happen overnight, she confirms, particularly in respect of filing deadlines. “There was a wide variety of responses to the first consultation in relation to how long a company might have to file accounts, but most people suggested three months or six months. We are aware of the challenges this might pose and are considering the consultation responses and continuing to engage with key stakeholders before any decisions are made”.
She says that the faster Companies House can get information on the register under the new regime, the faster it will have a positive impact on the value of the register. “We can assure companies that we won’t do anything immediately, and we will of course give notice of any changes”.
ICAEW Insights will be featuring the second part of the interview with Companies House CEO Louise Smyth on the organisation’s enhanced role in law enforcement next week. To read this and stay up to date with other accountancy news and guidance, subscribe to ICAEW’s Daily email via your preference centre.
Further information on ICAEW’s responses to each consultations can be accessed using the links below: