The government is currently looking at ways of reducing the amount of red tape suffered by companies. Currently, there is a requirement for all companies to submit two basic documents to Companies House:
- An annual set of accounts showing the financial performance of the company; and
- An “Annual Return” listing the officers and shareholders of the company.
In our experience, many people forget about the Annual Return or think that submission of the accounts is sufficient. However, failure to submit this document, and pay the filing fee, is the most common reason for the Registrar of Companies commencing striking off procedures.
Besides these basic documents that all companies have to file, there are a large number of actions that must be reported to Companies House, such as changes in directors, and changes in the registered office.
One of the simplifications being considered is either the scrapping or simplification of the Annual Return and, instead, replacing it with a requirement to confirm annually that the information held by Companies House is correct or providing an update. A second simplification being considered is for a new director’s “consent to act” not having to be filed but instead for the company to simply confirm that it is holding such a consent and can produce it if required.
We do not necessary believe that either of the above will be effective in reducing the burden on a company. Currently, the Annual Return supplied by Companies House is pre-filled with the information held by them, and this covers everything except shareholdings. Only if that information is wrong is it necessary to fill in anything other than shareholder changes, and most can therefore be submitted with only a very few keystrokes on a computer. In fact, it is so simple that we only ever charge clients the filing fee for submitting this on their behalf! We feel that any changes will increase complexity rather than simplify the requirement.
With regard to not having to submit a “consent to act” we believe that this will only prove to be a simplification for Companies House. Without this need to provide someone’s consent then we can see that people may be appointed as a director without their knowledge. We can then see great problems in trying to “prove” to the tax office that they had nothing to do the company!
Instead, why don’t they look at getting rid of some of the penalties that they charge, or at least in using some discretion in applying them.