I am not Mark Wadsworth
One of the unheralded successes of the British financial services sector is company incorporation. For around £30 online you can have a fully functional private limited company incorporated and ready to trade in 24 hours. Compare this with our "partners" in the EU. In Spain, for instance, the cost of an equivalent company to the punter is about 100 (yes one hundred) times that. Moreover, there's endless delay together with a Grand National's worth of bureaucratic hurdles to jump over.
Unfortunately, the coalition is unhappy to see this tiny piece of excellence and efficiency continue. The Registrar of Companies proposes, on the basis of what appears to be the wilful misreading of two EU directives - 2003/58 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2003:221:0013:0016:EN:PDF and 2006/123 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2006:376:0036:0068:en:PDF , to set up in competition. The new service, to be called the "Citizens Incorporation Service", will be provided in concert with another taxpayer funded organisation (Business Links) and in competition with the existing (private) providers. The cost of incorporation through the new service will be £18.
On a reading of the Directives it's clear that 1. they were not issued to give Companies House and another taxpayer-funded entity an effective monopoly on company incorporation in the UK and 2. the existing Companies House regime already complies with the directives. I write "effective monopoly" because the £18 proposed fee is equivalent to the cost price of the service to company formation agents. This basic cost to the CFA does not include any return on the extensive software investment necessary to the CFA to effect an incorporation.
Worse, the basic cost doesn't include the cost to CFAs of applying, at considerable expense, the money laundering and "know your client" regulations. These regulations, by the way, will not apparently apply to incorporations through the Citizens Incorporation Service. I know those regulations are a farce (the equivalent of the "security theatre" mounted daily at airports world-wide) but, even so, you would expect the producers of the farce to ensure that their own bureaucrats at least went through the motions.
I should add that a similar proposed scheme was turned down by the previous (Labour) government partly because of the significant damage it would do to existing CFAs. This doesn't seem to worry the Minister for Business - Mark Prisk (a "Conservative") - or his boss Vince Cable.
On a personal note I should add that part of my services to clients includes arranging incorporations. I use a very efficient and reasonably priced CFA who I intend to keep using.
Umbongo
5 comments:
U, in theory, I don't see the harm in allowing people to do it for themselves (and they always could). I think the point is that most people mess it up, as do most CFAs and so this generates work for people like thee or me who know what we are doing.
The killer here is not applying the money laundering shite to Companies House itself, which just highlights what a crock of pointless shit this really is.
I suppose a CFA might as well not bother with it any more, on the basis that a money launderer would use the direct service anyway...
I don't see how it could create a monopoly though, there are companies offering a basic formation service for free if you open a bank account with their linked bank from which they receive a commission and thus derive their income, used on recently that had links with Barclays & HSBC, £33 if you don't open an account with one of those banks, free if you do.
MW
As you say, they have always been able to do it for themselves ie get the forms from Companies House, fill them in and send them on (with a cheque). The new service, as I understand it, goes further and acts as a CFA pure and simple and in direct competition (at your and my expense) to existing CFAs. The Registrar of Companies is (or should be) just that: a registrar running a registry. What next? HMRC acting as tax consultants at £10/hour?
Mind you, the uselessness of the run of the mill CFA when a non-straightforward incorporation is required is legendary. I think I probably sent one of my sons through university on the profits I made clearing up such messes. OTOH, I can't imagine that the Citizens Incorporation Service would be better. So the good news is that you and I would still be in business.
SW
In the example you give there would be an oligopoly (rather than a monopoly) comprising the banks and the Registrar: why would anyone use a CFA? He'd be more expensive than the CIS and wouldn't bring a bank account to the table.
What's a CFA?
B, it's a company formation agent.
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