Common Mistakes in Confirmation Statement Filing

Filing the confirmation statement for your business should not be a headache. Yet, every year, thousands of UK companies are penalised due to easily avoidable mistakes. The most common mistakes in confirmation statement filing can cost you time, money, and even your company’s standing with Companies House.

In addition, company directors tend to underestimate the complexity of this annual legal requirement. As a result, seemingly simple mistakes can become costly issues in the long run. This guide will help you complete the process correctly while staying error-free and compliant.

Understanding the Confirmation Statement

The confirmation statement replaced the annual return in 2016. In a nutshell, it is a snapshot of your company’s information at a particular point in time. It also confirms that the information held by Companies House is up to date and correct.

Many company directors still confuse the confirmation statement with the former annual return. There are, however, some major differences.

• Firstly, the confirmation statement is simpler and more flexible.
• Secondly, you can file the statement more often if there are frequent changes to the company information.

Unlike errors in annual returns in the past, common mistakes in confirmation statement filing today often arise from a misunderstanding of these changes.

7 Most Common Mistakes in Confirmation Statement Filing

Common mistakes in confirmation statement filing can result in prosecution or company strike-off. Below are the most common mistakes to avoid:

• Missing the Deadline

Of course, one of the most expensive mistakes is likely to be the failure to meet your filing deadline. Companies House may impose penalties for late filing. Subsequently, these penalties can quickly escalate, including prosecution of directors or fines up to £5,000.

Your confirmation statement is due within 14 days of the “review date.” Thus, mark your calendar well in advance. Moreover, set multiple reminders to avoid this common unintentional mistake. Late submission is also reflected on your public record. Therefore, it may harm your business reputation with potential investors and partners.

• Incorrect Shareholder Information

Common mistakes in confirmation statement filing also include issues related to shareholders’ information. Directors often forget to update share transfer information or new shareholdings. In addition, they may enter incorrect shared class information or amounts.

Each allocation of shares must be accurate. Further, calculations of percentages must be done correctly. Otherwise, the submission may be rejected. It is always important to verify the shareholders’ details before submission. Additionally, you should cross-check with your statutory registers.

• Outdated Director Details

Another frequent mistake involves director information. Changes in residential addresses must be reported. Similarly, updates to service addresses require immediate attention. Many companies forget to remove former directors’ information. Conversely, they fail to add newly appointed ones. These common mistakes in confirmation statement filing can lead to legal complications.

Directors’ dates of birth, nationalities, and occupations must also remain current. Therefore, implement a system for tracking these changes throughout the year.

• Wrong Registered Office Address

Your registered office address is crucial for official correspondence. However, companies frequently list incorrect addresses. Moreover, some forget to update this information after relocating.

The registered office must be a physical address in the same jurisdiction. Consequently, PO box addresses aren’t acceptable for this purpose. Additionally, the address must be where statutory documents are kept.

Always double-check this detail. Furthermore, ensure Companies House has been notified of any address changes separately before filing.

• Inaccurate SIC Codes

This is one of the most common mistakes in confirmation statement filing. Your business activities are described by SIC (Standard Industrial Classification) codes. However, many firms select incorrect codes. Moreover, they sometimes forget to change the codes with changes in business practices.

If the SIC code used is incorrect, there may be implications for tax and statistical purposes. So pick from the official list wisely. You can also choose up to four codes that best describe your business. Review your SIC codes annually. Also, make sure that they reflect your recent trading operations truthfully.

• PSC Missing Information

For nearly all businesses, submission of the PSC information is compulsory. But widely seen errors in submitting CS reports are incomplete and/or incorrect PSC particulars. And, companies sometimes miss all the people with significant control.

A PSC usually holds over 25% of shares or voting rights. In many cases, they hold significant influence or control over the company. Hence, accurate identification of all PSCs remains challenging.

The name, address, date of birth, and nationality of every PSC should be accurate. Furthermore, it is necessary to describe in detail the type of control they exert.

• Not Updating Trading Status

Companies have to specify whether they are trading or not. Nevertheless, many companies overlook this declaration. As a result, they present inaccurate information to Companies House.

In case your company does not trade any longer, then you should mention this. On the other hand, when a dormant company starts trading again, change the status. This information is important in compliance with regulations.

How to Avoid CS Filing Errors?

After knowing about the common mistakes in confirmation statement filing, it becomes easy to avoid them while filing.

• Keep Accurate Records Year-Round

Prevention starts with good record-keeping. Do not wait until the last minute. Rather than applying every 14 days or a month, it’s a better idea to keep your statutory registers up to date as soon as any new information comes in.

Create a process for recordkeeping of all company modifications. And don’t forget to appoint an individual who maintains these records. Digital solutions can help tremendously. They can also incorporate automatic reminders and validity checks.

• File with the Companies House WebFiling Service

There is a free online Web filing Service by Companies House. The system already has validation checks. Thus, it detects a great deal of errors before submission.

The process walks you through each step. It also reveals what is not relevant and where information is contradictory. So when used, this service can help you reduce the risk of common mistakes in confirmation statement filing.

Alternative software solutions also exist. But be sure to check they’re suitable for Companies House before you integrate them into your company’s systems.

• Review Before Submission

Be sure to review the confirmation statement filing thoroughly before submitting it. Verify every detail against your company records. Also, double-check all figures and other numerical data.

Have the document reviewed by another person. A new mind often detects mistakes you may have overlooked. And this additional step can make all the difference and save you from expensive mistakes.

• Get Assistance from a Pro

When in doubt, get professional help. These are strict obligations that accountants and company secretaries know very well. This means their experience can save you from costly mistakes.

Professional services aren’t only for big companies. Some experts also provide services to small business owners. Additionally, the cost of professional assistance is often far less than penalty fees.

Consequences of Filing with Errors

Having discussed the Common mistakes in Confirmation Statement filing and also the measures to prevent them, now we will explain the consequences of filing with errors:

• Financial Penalties

Filing late also results in penalties from Companies House. Inaccurate information might also lead to prosecution. Directors may be personally fined up to £5,000. As such, precision is not just good practice, it’s a legal necessity. These penalties are also reflected on the public record for your company. They could have an impact on your credit and business prospects.

• Legal Complications

Persistent failures or late filing can lead to company dissolution as a last resort. Companies House may strike off companies that don’t maintain compliance. Consequently, you could lose your business entirely.

Directors have legal obligations under the Companies Act 2006. Failure to meet these obligations can result in disqualification. Moreover, this prevents you from serving as a director for up to 15 years. Criminal prosecution is possible for deliberate non-compliance.

• Reputational Damage

Your company’s filing history is publicly available. Potential clients, investors, and partners often review it closely. Therefore, a poor compliance record damages your image. Late filings suggest poor management and organisation. Consequently, this may deter business opportunities.

Moreover, it can affect your ability to secure financing. Maintaining a clean filing record demonstrates professionalism. Furthermore, it builds trust with stakeholders and regulatory bodies.

The Bottom Line

There are efficient ways to prevent common mistakes in confirmation statement filing through proper planning and attention to detail. By understanding these pitfalls and implementing robust systems, you will achieve compliance comfortably.

The verification process requires accuracy rather than speed. The process of confirming information requires you to dedicate time to complete verification of all components. You should ask experts for assistance whenever you encounter challenges that require their help.

Your confirmation statement also serves as a business opportunity to verify that your company holds precise and up-to-date information. The statement deserves careful attention and should not be treated as a formality.

Therefore, start preparing now, even if your deadline seems distant. Eventually, the process will help you avoid the common mistakes in confirmation statement filing, which affect many businesses. In this way, you can protect your company’s professional image, which it deserves.