Companies House has recently been writing to clients where they suspect that the PSC (Person with Significant Control) register is incorrect or has not been updated following changes in shareholders or ownership, as identified on the Companies confirmation statements. Alongside this, H M Revenue and Customs also has access to the Companies House portal, and where they see a change in the PSC, they are looking into individuals’ personal tax returns to ensure that the appropriate capital gain is disclosed on the disposal of shares.
Who is a PSC?
Since 6 April 2016, it has been a legal requirement for all limited companies to identify key people within their organisation, often referred to as ‘Beneficial Owners.’ Even if a company has no key people within the organisation, then the fact must be stated at Companies House.
A Person with Significant Control - whom/which must be registered with Companies House - can be an individual, or a corporate entity i.e. another limited company (known as a Relevant Legal Entity (RLE)), who directly, or indirectly holds the following:
More than 25% of the share capital
More than 25% of the voting rights
Has the right to appoint or remove the majority of the directors
Otherwise has the right to exercise significant influence and control
having the right to exercise or actually exercises significant influence or control over the activities of a trust or firm which is not a legal entity but would satisfy any 1 of the first 4 conditions if they were an individual.
In order to be identified as a PSC, then you only need to meet 1 of the above conditions. If this is the case, then you are a Person with Significant Control.
Other examples of Persons of Significant Control
The following are other examples as to who may be considered a Person with Significant Control:
an individual has an indirect control of the company, for example, shares are held (parent) holding company, but not the (subsidiary) limited company itself.
an individual who is not a shareholder, but is deemed to have significant influence on the company, and is responsible for the day to day running, and key decision making of the company. This is normally a director and shareholder of a company.
An individual who owns the building from where the business operates from
Who is required to keep a PSC register?
The following entities are required by the Companies Act 2006 to keep and maintain a PSC register:
Private company limited by shares or by guarantee
Public company limited by shares or by guarantee that does not fall within any of the exceptions set out in s790B(1) of Companies Act 2006
Unlimited company
Societas Europaea
An unregistered company
Any such company that is a dormant company, community interest company and a charitable company
The following entities are not required to keep a PSC register:
Open-ended investment company
Overseas company, as defined by S1044 CA 2006
Any other overseas entity
Co-operative, community benefit and friendly societies
Charitable incorporated organisations
Charity trustees incorporated as a body corporate
How to notify a change in PSC
Once you become aware of a potential change to a company’s PSC, there is a strict and tight timescale to report this to Companies House. You only have 14 days to identify the changes to a PSC, and a further 14 days to notify Companies House of any changes. This is done via a PSC01 form, which can be done in either paper form, or online using the company authentication code.
It is very important that when a PSC is identified not only that Companies House are notified in line with the above timeframes, but that the PSC themselves acknowledge the fact that they are a PSC.
It is also vitally important to note any changes to the PSC register unless the individual or RLE has formally acknowledged that they are a PSC. As soon as an individual is notified that they are a PSC, the legal requirement for filing the PSC passes to the individual. If the individual fails to respond to a notice of a change to PSC, then this is a criminal offence and can lead to a fine, or a two year prison sentence – or both!
If you require any assistance with reviewing your PSC status, then please get in touch with us on 0808 144 5575 or email help@armstrongwatson.co.uk.
