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Companies House has issued guidance on standard industrial classification (SIC) code accuracy following new powers introduced by the Economic Crime and Corporate Transparency Act ("ECCTA"). This move is interesting; it is part of the new 'gatekeeper' role now undertaken by Companies House to ensure that all details on the Companies House website are correct.
SIC codes may previously have been seen as relatively unimportant, serving mainly to provide Companies House with statistical data on industry trends. The new post highlights the importance being attributed to the SIC code.
Why SIC code accuracy matters
SIC codes are mandatory for all companies. Every company registered at Companies House must provide at least one ECCTA has introduced new enforcement powers enabling Companies House to challenge, reject or remove information that appears incorrect, inconsistent or misleading. This new guidance emphasises that this power applies to SIC codes in the same way as to any other filed information.
Companies House has identified the use of dormant or non-trading SIC codes by actively trading companies as one of the most common discrepancies on the register, and one that is likely to attract scrutiny under its new powers. Where a SIC code does not reflect a company's actual activity, the company may experience filing rejections or delays whilst discrepancies are investigated.
Companies must ensure their SIC code continues to reflect their actual business activity. If the business activity of the company has changed since incorporation, the SIC code must be changed.
What companies need to know about SIC codes, Companies House and register accuracy
Choosing the right code. Companies can select up to four SIC codes from more than 600 available, divided across 21 main industry categories. The codes available can be found on the Companies House website. Companies House has suggested using its Find and update company information service for companies offering similar services to help determine which code applies to a company, if assistance is required.
To update a SIC codes companies must file a confirmation statement, noting that the annual fee for a confirmation statement is payable only once within any 12-month period.
SIC codes: small detail, bigger compliance risk
Companies House posed the following three questions to help companies:
- Are you trading? If so, does your SIC code reflect this, rather than showing a dormant (99999) or non-trading (74990) status?
- Has your business activity changed? If you've moved into a new sector or changed what your company does, your SIC code should reflect your current activity.
- Does your SIC code accurately describe what your company does? If there's a mismatch, it could affect your relationships with lenders or your eligibility for certain funding.
The Companies House guidance blog can be accessed now.
For advice on SIC code accuracy or any other ECCTA queries, contact Sharon Ayres, Amar Adatia or your usual Gowling WLG contact.
Read the original article on GowlingWLG.com
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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