Person with significant controlWhat is – People With Significant Control (PSC) Register

People with significant control REGISTER or PSC for short!

Very often we will get asked by prospective clients, “What is a People with Significant Control or PSC for short, return?

People with Significant Control or a PSC return for short is legislation that came into operation back in 2016 and applies to virtually all UK private companies.

The UK government requires each company, no matter how small to keep a register of the people that have significant control over the organizations activities and it’s known as a PSC register and non-compliance can attract a penalty. Oh, and it’s also a criminal offense.

So, what is it?

Why was it introduced and what does it mean to you as a business owner? As I’ve already said it was legislation put in place by the government and it requires companies registered in the UK to file a register of people with significant control with Companies House.

As with all of the registers that are filed with Companies House, the PSC register will be available for inspection by the public.

It was introduced, in short, because a group of nations, including the UK wanted to bring more transparency, trust and accountability and to identify who effectively pulls the strings or runs the company.

It’s a problem that only really impacts a small proportion of businesses but for which a blanket solution was required in order to tackle the problem.

For details on the full legislation you can find it here: –

UK Government legislation information on www.gov.uk

 

Who does the PSC register legislation apply to:

The primary aim of the legislation and the real reason for it coming into being is to tackle those very complex ownership structures of large organizations where it’s not easy to see who effectively has got significant control, hence the PSC register legislation applies to practically all UK private companies.

So, this is not exhaustive, but the PSC register will be required to be completed by: –

Private companies limited by shares
Private companies limited by guarantee
Limited liability partnerships, otherwise known as LLPs
Most public limited companies,

So, it is required to be completed by existing companies and all new companies formed from day one, effectively, but it doesn’t apply to:

Sole traders
Limited partnerships
Charitable incorporated organizations
Overseas entities operating but not registered as a company in the UK
Companies with voting shares admitted to trading on a regulated market in the UK
Companies that are subject to Chapter 5 of the FCA Disclosure and Transparency
Companies with voting shares admitted to trading in another European Economic Area State
organizations which don’t really apply

So, what do you do in order to comply?

Well we tend to take care of the PSC for, our clients.

Of course, you can file it yourself it’s your choice and clearly a lot of companies do. There are approximately six steps to having a fully compliant PSC entry on the register.

  • So firstly, you would need to identify who actually has significant control over the company. Now this is usually in a very small family run company, very easy. It’s who owns that the shares.
  • You need to make contact with those individuals to confirm whether they meet the specific control conditions.
  • The third step is ensuring that if they meet those conditions that you’ve got the relevant information to include on the register.
  • The fourth step clearly, is to create that entry and input the details as required for all the people with significant control.
  • Step five is to confirm the information and submit to Companies House. This used to be part of the annual return process, but the PSC has replaced that.
  • And then finally, keep all information on that PSC up to date, remove somebody if they stop meeting those control conditions and obviously just make sure that the information held on the register with Companies House is correct.

So, what/who is a person with significant control?

A person with significant control is somebody who owns or controls a company, somebody who can decide to determine on an organization’s direction and activities and somebody with significant control must meet at least one of these conditions.

So
They must own more than 25% of the company shares
They must hold more than 25% of the company’s voting rights
Have the power to appoint or remove the majority of the company’s board
Have the right to or in reality actually exercise significant influence or control over the company.
Have the right to, or actually exercise significant influence or control over a trust or a firm that is not a legal entity which itself satisfies any of the fourth first four conditions.

There is a detailed statutory guidance explaining the scope of the legislation on the government website on the link above.

 

There are different conditions, though, for LLP’s, although they are based on the same principles for companies limited by guarantee, which generally do not have shares, although the same rules apply. Albeit in a slightly amended form

In the majority of cases, a person with significant control (PSC) is an individual although there are a few exceptions, a person with significant control must be entered on to the register whether nominated directly or in directly, but only once their details have been verified

While legal entities like companies are not classed as a PSC, they may be classed as relevant legal entities and we need to have their details recorded on the PSC

As you can see the legislation appears to be fairly complex and it does seem to be overkill for small business owners, however, it is a good idea to have corporate transparency for larger companies,

Clearly for smaller companies, there isn’t the same level of complexity in terms of who does have the significant control of an organization because it’s usually the business owner or family members.

There is a risk to business owner of not being compliant and facing a penalty and obviously risking, a criminal offense. So, what we find is the solution is:

 

Either ensure that your accountant deals with this for you especially if you’re new into business
OR
Make sure that you’ve got it on your radar when it needs submitting

 

We would recommend that you keep a digital record of your PSC register that can be easily updated when things change, and that it’s available to submit annually to Companies House.

If you’d like any help with that, then please get in touch.

 

It is important that you take professional advice before making any decisions based on the information that you learnt here. While every effort has been made to make sure it is accurate it cannot be precisely tailored to your personal circumstances.This article is for general information only and no action should be taken, or refrained from, as a result of this information.  Professional advice should be taken based on specific circumstances in each individual case.  Whilst we endeavour to ensure that the information contained in the article is correct, no liability  will be accepted by KMA Accountancy which is a trading name of Kim Marlor Associates Ltd or damages of any kind arising from the contents of this communication, or for any action, inaction  or decision taken as a result of using any such information.

Tags: , , , , , , , , , ,

Get in touch

0161 410 0020
info@kmaaccountancy.co.uk

KMA Accountancy
Progress House
17 Cecil Road
Hale
Altrincham
Cheshire WA15 9NZ

Latest news

Are you missing out on these legitimate tax savings?

With the end of the tax year looming in the not too distant future, it's time to take the challenge and see if there is any opportunity to be more...

KMA Goldmine TV – Episode 17-Sabotage!

Do you know what is happening in your business when your not around? Find out why your future profits rely on it!
Keep reading...

Tweets @KMAltd