What is the ECCT Law?

The ECCT Act is a set of reforms designed to improve the transparency and accuracy of company information in the UK, particularly through Companies House. Among the key changes are:

• Enhanced powers for Companies House to query and verify company data, request supporting evidence, and remove inaccurate information.
• The introduction of identity verification for company directors and persons of significant control (PSCs).
• New requirements for companies, such as providing a valid email address and an appropriate registered office address (no PO Boxes).
• Stricter checks on company names and the lawful purpose of businesses.
• The ability to share information with law enforcement agencies and other government departments to prevent economic crime.

This new law builds on previous legislation like the Economic Crime (Transparency and Enforcement) Act 2022 and aims to curb misuse of corporate structures for illicit purposes. It strengthens the role of Companies House, turning it into a more active gatekeeper of company information, rather than just a passive registry.

Impact of ECCT Law on Your Companies

The ECCT Act will affect your company in several ways, and it’s essential that you understand the specific actions required to comply with the law:

1. Increased Compliance Requirements: Companies will need to ensure that their information is accurate, up-to-date, and complete. This includes providing proper office addresses, registering email addresses, and ensuring that the company’s directors and PSCs are verified. Non-compliance could result in penalties or even criminal charges.
2. Stricter Identity Verification: Directors and PSCs will need to verify their identity through an Authorised Company Service Provider (ACSP). As your trusted ACSP, we will guide you through this process, ensuring that all necessary verifications are completed accurately and in compliance with the new regulations.
3. Enhanced Data Sharing: Companies House will now have the ability to share your company’s data with other government agencies, which could include law enforcement. This could lead to faster investigations if suspicious activities are detected.
4. Reputation Management: These changes will help improve the overall reliability of company data in the UK, thus enhancing the trust and reputation of businesses. However, it also means that any inaccuracies or fraudulent activities tied to a company will be more easily discovered.

What Should You Do?

Given the complexity of these new rules, you must work with your accountant or legal advisor to ensure your company complies with the ECCT Act. Here are some key steps to take:

• Verify your company details: Ensure that all of your company’s data, including directors, PSCs, and registered addresses, are accurate and up-to-date.
• Prepare for identity verification: Make sure that all directors and relevant individuals are ready to verify their identities through an Authorised Company Service Provider (ACSP), as this will be mandatory. Talk to us. Elaga Accountancy is rergistered Authorised Companies Service Provider, also the Regulated Agent of Verifying Identity for Overseas Entities, as well as registered HMRC Tax Agent. Elaga can be of help to you whatever your situation is.
• Monitor your company filings: Keep track of all required filings, especially for your confirmation statements, to ensure compliance with the new rules.
• Consult your accountant: Ensure your accountant is aware of the new law and can help you navigate the changes, from filing requirements to ensuring your business is protected from any penalties or liabilities. Elaga Accountancy is registered ACSP, Regulated Agent to Verify Identity of Overseas Entities, and HMRC Tax Agent (for your own benefits, please note not every accountant is registered agent in each category).

Benefits of Complying with the ECCT Law

While these changes may seem burdensome, there are significant benefits to ensuring your company is fully compliant with the new ECCT law:

• Prevent Fraud and Misuse: These regulations are designed to prevent your company from being used for illegal activities, such as money laundering or fraud. Compliance ensures that your business is not inadvertently caught up in criminal activities.
• Stronger Reputation: By complying with these rules, your company will be part of a more transparent and trustworthy business environment. This could enhance your company’s reputation with customers, investors, and regulatory bodies.
• Avoid Penalties: Non-compliance with these new regulations could result in fines, penalties, or even criminal charges. Ensuring your company complies with the ECCT law will help avoid these consequences.
• Improve Business Operations: By having up-to-date and accurate company information, you can make better-informed decisions and facilitate smoother business operations, especially when it comes to dealings with partners and investors.

Conclusion

The ECCT Act is a critical step towards improving the transparency and accountability of businesses in the UK. While it introduces new challenges, it also offers opportunities for companies to strengthen their operations and protect themselves from legal and financial risks. As these rules are being phased in, it is crucial that businesses, especially those operating at the company level, stay proactive in understanding and complying with these changes. Always consult your accountant, we at Elaga Accountancy can ensure that you are properly prepared and protected in the face of these evolving legal requirements.

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