Future of the Annual Return

Could annual returns be a thing of the past?

Most contractors would probably welcome not having to file an annual return with Companies House. Not only would it be one less onerous task to fulfil, it would also save the freelancer’s company £13 or £40 each year depending on whether the form was filed electronically or by post.

The abolishment of the annual return could become a reality following the publication of a consultation document last month by the Department for Business, Innovation and Skills, titled ‘Transparency and Trust:  enhancing the transparency of U.K company ownership and increasing trust in U.K business – discussion paper.’ The paper sets out proposals which will help:

• Prevent illegal activity,
• Better enable companies to be held to account; and
• Provide businesses, investors, employees and consumers with confidence that companies are acting fairly.

Whilst the primary focus is on making larger public companies more accountable there are a number of measures that are of equal significance to private limited companies, one of which is the potential abolition of the annual return.

Currently all companies are required to submit an annual return to Companies House which confirms certain information about the company which includes:

• Details of the directors
• Registered office
• Share capital and legal owners

The annual return acts as a safety net to ensure that companies have an opportunity to review, and if necessary update, their information at a fixed point each year. The consultation however makes the point that the majority of companies would have updated their information, regarding any changes, throughout the year as they are required to do so by the Companies Act 2006.

In view of its commitment to reducing any unnecessary duplication and burdens on business, the Government is therefore considering possible changes to the annual return process which would affect all companies. This would be good news for over 95% of approximately 3 million companies in the UK, as they are small and micro businesses.

The consultation document proposes to simplify the filing requirements for all companies whilst ensuring that the register remains up to date.

Options might include whether companies should be able to choose to combine a new approach to the annual return with the filing of the annual accounts.  This would mean that they would only need to make one annual update.

At the same time other proposals will be looked at to reduce the duplication of information required from companies by different government departments and agencies.

The consultation period closes on the 16th September 2013. The full document can be downloaded from the Company ownership: transparency and trust discussion paper page.