The Small Business Enterprise and Employment Act was granted Royal Assent on 17 September 2015 and represents a commitment on the part of the UK Government to meet the objectives laid out in the UK G8 Action Plan, published after the 2013 G8 Summit. This plan centres around greater tax transparency, particularly corporate transparency and beneficial ownership. Alongside the OECD’s Common Reporting Standard which is due to be enforced from January 2016 and the existing Tax Information Exchange Agreement (TIEA) network, this is likely to impact heavily on those included within the high net worth individual (HNWI) bracket.
The Act introduces a number of changes including various measures aimed at increasing transparency in relation to UK companies including:
- The abolishment of bearer shares;
- The requirement to keep a register of people with significant control over the company (PSC); and
- Prohibition on appointing corporate directors, with limited exceptions.
These new measures are to be phased in over time, as follows:
Bearer shares were abolished at this date and any existing share warrants must be surrendered within 9 months. These shares are unregistered and owned by whoever physically holds them. The anonymity of bearer shares and the ease with which they can be transferred provide the ideal vehicle for the facilitation of tax evasion and money laundering.
The ‘PSC register’ will assist HMRC to identify individuals who are using companies to divert income into entities to avoid income tax and NICs and will be a requirement from this date. The register will include information on an individual’s name, date of birth, nationality, address, and details of their interest in the company. From June 2016 the information contained on these registers will also need to be filed at Companies’ House.
Subject to limited exceptions, companies will be prohibited from being directors. Existing corporate directors as at this date will need to advise Company’s house that they no longer act or alternatively provide an explanation of why they meet the criteria for exception.
The Act in full can be accessed here: http://www.legislation.gov.uk/ukpga/2015/26/pdfs/ukpga_20150026_en.pdf
Clients who are likely to be affected by these new measures will no doubt be looking to their adviser to provide potential solutions for the management of their interests going forward. There is a small window of time remaining before this legislation is enforced and consideration should therefore be given at the earliest possible date as to the impact on those concerned. If you have a query regarding this new legislation or other company requirements, please call TaxDesk on 0845 4900509 and ask for Isobel Clift.