In 2022, the Queen’s Speech included a range of new measures that will affect UK limited companies and overseas businesses operating in the UK. Let’s explain what those changes are and how they’ll impact your company moving forward.
Every year, the Queen’s Speech provides the UK Government with a platform with which it can set out all of the upcoming legislation it intends to pursue in the coming months. That speech tends to cover an incredibly wide range of topics — from rules on healthcare and military spending, to energy, income tax and transportation.
But in 2022, the Queen’s Speech honed in on business issues that will have a lasting impact on both UK limited companies as well as foreign entities interested in doing business here in the UK.
To help you understand the government’s plans for UK business over the next 12 months, this guide will walk you through key changes on the horizon and what they could mean for your limited company.
New rules on corporate transparency
One of the UK Government’s headline business policies during this most recent session of parliament is the introduction of its Economic Crime and Corporate Transparency Bill.
According to ministers, the Bill is designed to “tackle economic crime, strengthen our national security, and boost small business” — and politicians are hoping the new law achieves those aims using several tools.
The first key tool that’s being introduced by the Economic Crime and Corporate Transparency Bill is the creation of a new “Register of Overseas Entities”.
This measure will create a new register of companies that will sit with Companies House. It will publicly list all foreign-owned entities operating in the UK — making sure all of the information about them and who owns each asset is accessible to everybody in one place.
In terms of requirements, the register is going to require all overseas entities that own (or have a desire to own) UK property to share information about their beneficial owners. The data and individuals concerned have then got to register their details with Companies House.
Any information you supply to Companies House will have to be verified by the UK Government. Once your information has been verified, you’ll then need to update the information on the Register of Overseas Entities on an annual basis. This is important to bear in mind if you operate a foreign company doing business in the UK, because it represents another annual filing requirement.
If you fail to reveal information about your company’s “beneficial owner”, you could face a fine of up to £2,500 per day, or as much as five years in prison.
In addition, the Economic Crime and Corporate Transparency Bill is going to boost the government’s power to carry out unexplained wealth orders (UWOs).
Thanks to the new Bill, investigators will be given the ability to explore and target individuals and businesses managing properties with complicated offshore arrangements — whether the parties concerned are the beneficiary of a UK asset’s ownership or not.
Finally, the Bill is proposing the biggest change to Companies House in 170 years. Moving forward, any individual or entity that registers, runs, or owns a controlling interest in a UK limited company will need to verify their identity with Companies House.
At the moment, there’s already a verification process in place.
But Companies House doesn’t have the ability to challenge the data it receives if it seems questionable or incorrect. Thanks to the new Bill, Companies House will now have the power to ask for additional verification or refer details to security agencies like the National Crime Agency if it suspects any illicit activity.
Changes to auditing and accounting rules
The UK’s auditing and accounting industries have recently come under fire, following the collapse of several huge British corporations.
In response to increasing calls for the UK’s audit, corporate reporting and corporate governance system to be updated, this year’s Queen’s Speech declared the government’s intent to instigate a stronger regulatory regime for auditors looking at UK companies.
The Queen’s Speech explained how the government is getting ready to publish a draft bill that will create a new statutory regulator tasked with targeting the Big Four audit firms: PwC, Deloitte, EY and KPMG. This new regulator, the Audit Reporting and Governance Authority (ARGA), will replace the Financial Reporting Council (FRC).
The draft Bill will also include the introduction of shared audits, so that challenger firms are able to carry out a share of the work on large-scale audits. Similarly, the government is widening the definition of “public interest entities” to include the largest private firms — which means that more companies will require auditing on a regular basis.
Strengthening consumer rights and promoting business competition
Another upcoming change that the Queen’s Speech outlined was the government’s intent to publish draft legislation designed to bolster consumer rights protections.
This includes rules cracking down on “bad business practices” like publishing fake reviews or complicated subscription frameworks that make it difficult for customers to unsubscribe. The draft bill will also address prepayment schemes like Christmas savings clubs — which the UK Government says will need to be insured or shored up through trust accounts to make sure the money of customers is 100% safe.
Finally, the rules are set to create a new competition regime with the idea of making markets for consumer goods and services “more competitive”. This includes handing new rules to the Competition and Markets Authority (CMA) to provide it with more powers to crack down on bad businesses ripping off consumers.
Translation: UK companies that run subscription-based services, savings clubs, or other cash-based consumer services are going to have to take a long, hard look at their offerings to ensure they’ll be accepted by the CMA.
Thanks for reading
It’s important to note that this is just the tip of the iceberg. The Queen’s Speech also outlined a number of plans to boost the UK’s energy infrastructure, NHS reform, and more. But if you want to keep your ear to the ground and be the first to know about any upcoming changes to UK company rules, you’re in the right place.
Visit the 1st Formations central blog page for all the latest news on UK limited companies, Corporation Tax, startup taxes and more.