Upcoming PSC register needs careful handling
For those as yet unaware, accountants, solicitors, and company secretaries responsible for maintaining statutory registers of companies and LLPs will soon have another job to do with the upcoming PSC register.
As from April, these professionals will be called upon to create and maintain this new register of people with significant control.
This move will be effective for companies from the start of the new tax year on 6 April 2016.
It is one of the changes introduced by the Small Business, Enterprise and Employment Act 2015 to improve transparency about how companies are run.
It isn’t something that can be put on the backburner either. They are necessary to file with Companies House from 30 June 2016, with the first annual confirmation statement, which replaces the annual return.
The PSC register will not look too different to the register of directors and must record the same particulars of individuals and organisations with significant control (PSCs) as the current register of directors, which must record directors, but the new world will have the addition of details regarding the nature of their control over the company.
These details will be publicly available, with the exception of an individual’s residential address and day of birth.
It’s worth pointing out though that identifying a company’s PSCs, however, is more complex than identifying its directors. An individual is defined to include not only natural persons but also corporations sole, governments, government departments, international organisations and UK local government bodies and authorities.
Significant control over a company is decided if a person:
- Holds more than 25% of the shares in the company
- Holds more than 25% of the voting rights in the company
- Holds the right to appoint or remove a majority of the board of directors of the company
- Have the right to, or do, exercise significant influence or control over the company; or
- Have the right to, or do, exercise significant influence or control over a trust or firm:
The first three conditions are relatively simple to apply, while consideration of conditions (4) and (5) require reference to guidance published by the Department for Business Innovation and Skills.
After a company’s PSCs have been identified, matters are further complicated by the requirement that only ‘registrable’ PSCs be included in the register.
The legislation calls for companies to take reasonable steps to identify and record PSCs. Companies and their officers who fail to do so risk incurring a fine or imprisonment. However, as the rules expressly prohibit inclusion of ‘non-registrable’ PSCs in the register, a company cannot attempt to bypass the complexities outlined above by including every potential PSC in the register. To do so would risk the inclusion of a non-registrable PSC and a possible fine of up to £1,000 for the company and every officer in default.
It means that those responsible for maintaining statutory books therefore have no option other than to make every effort to meet the requirements of the new rules regardless of how complex they are, and hope that there will be some forgiveness regarding errors and omissions, whilst the learning curve is being established.
If you need help regarding the PSC register, just contact us at AIT where we can soon put your mind as ease.