ECCTA: Key Changes in 2024 and what to expect for 2025 and beyond
The Economic Crime and Corporate Transparency Act 2023 (“ECCTA”) was introduced on 26 October 2023 to strengthen corporate governance and tackling economic crime in the UK.
ECCTA comes into force in stages and this article aims to provide a concise overview of what changes have been introduced, what are the upcoming changes and how to prepare for them. Organisations should be aware of these changes to ensure compliance and avoid the risks of penalties.
What changes were introduced in 2024?
Several key provisions of ECCTA were introduced in 2024 including:
• Increased Companies House fees: Companies House filing fees have been increased, please see a summary of these in our previous article here
• Enhanced Companies House powers: Companies House can now check, remove or decline inaccurate information submitted to or already on the companies register.
• Registered email address (“REA”): Companies must provide a valid REA either in incorporation or when they file their next confirmation statement to receive communications from Companies House such as reminders or challenge information provided.
• Registered office address (“ROA”): Companies are required to ensure that its ROA is appropriate and functional meaning that any documents sent to that address comes to the attention of a person acting on behalf of the company and it is possible for the sender to get confirmation of delivery. PO Boxes are no longer permitted as a ROA.
• Confirmation of lawful activities: When filing confirmation statements, companies need to confirm that their intended future activities will be lawful.
Upcoming changes in 2025 and beyond
The next phase of ECCTA implementation introduces substantial changes, including:
Failure to Prevent Fraud
• ECCTA introduced a new offence, which will come into force on 1 September 2025, targeting large organisations (those exceeding thresholds of £36 million turnover, £18 million in assets, or 250 employees).
• Companies will be held criminally liable where an employee, agent, subsidiary or other associated person commits a fraud intending to benefit the company unless the company can demonstrate that it had reasonable fraud prevention procedures in place at the time.
• Therefore, organisations should consult Chapter 3 of the official government guidance here to determine whether they have a robust fraud prevention procedure in place.
Identity Verification
• New and existing directors, persons with significant control (“PSC”) including officers of Registrable Legal Entities (RLEs) and members of LLPs will need to comply with the new identity verification requirements.
• These requirements will be staged across the upcoming years as follows:
o From autumn 2025, identity verification will a compulsory part of the incorporation process of new companies, appointment of new directors or new members of LLPs and new PSCs.
o Existing directors, members and PSCs will have a 12-month transition period starting from autumn 2025 to verify their identity with Companies House.
o From spring 2026, all individuals filing documents at Companies House or acting on behalf of a company must undergo ID verification.
• There are two routes to complete the identity verification either directly through Companies House or through an Authorised Corporate Service Provider (“ACSP”). ACSPs will include company formation agents, solicitors and accountants.
Limited Partnership (LP) Reforms
By the end of 2026, LPs will have to provide Companies House with more information including enhanced disclosure requirements and requirements to maintain a registered address in the UK.
Accounts Reform
Companies House has not announced a timeline for the proposed accounts reforms although it promises a lengthy formal notice period before these changes take effect. Such changes include (a) accounts having to be delivered to Companies House via software; (b) a requirement for all companies to file profit and loss accounts and require small companies to also file their directors’ reports; (c) to remove the option for small companies and micro-businesses to file abridged accounts; (d) limit the number of times that a company can shorten its accounting reference period; and (e) requirement of an enhanced statement from directors on the balance sheet specifying an audit exemption and confirmation that the company is eligible for such exemption.
How to prepare for the upcoming changes
To ensure readiness for the upcoming changes, organisations should:
• Identify presenter for filings: Determine who will be responsible for filings and ensure those persons are prepared for ID verification.
• Review Contact Information: Verify that the registered email address on file with Companies House is accurate.
• Communicate upcoming requirements: Notify relevant individuals (directors, PSCs, officers) of upcoming verification obligations and gather necessary documentation.
• Implement Fraud Prevention: Large organisations should establish and document robust fraud prevention framework.
The ECCTA represents an important shift in corporate transparency and accountability. Organisations must take proactive steps to adapt to the requirements implemented under the legislation to ensure compliance and mitigate risks.
