What is People With Significant Control Register?
Posted on 21st Jan 2022
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 organisations 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: –
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 is 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 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 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 organisation’s direction and activities and somebody with significant control must meet at least one of these conditions.
- 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 organisation because it’s usually the business owner or family members.
There is a risk to business owners of not being compliant and facing a penalty and obviously risking, a criminal offence. 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
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 to have a no obligation chat about what’s possible with your business then please either ping us an email to firstname.lastname@example.org or call us on 0161 410 0020.
After all, “Not all Accountants are the same”