TCSPs – do you know what you need to know?

It may surprise you to discover that offering company secretarial services is considered a high risk activity by the UK Government.

But because of the small but very real possibility of these services being used for money laundering purposes, HMRC is introducing a register of all individuals and practices who offer TCSPs (Trust and Company Service Provider secretarial services) or, as AAT calls them, Company Secretarial Services.

It’s essential to tell your professional body so they can put you on the register if you offer TCSPs – but it’s also useful to say if you don’t, for the sake of clarification. As we will see, many accountants are actually offering TCSPs without realising they’re doing so; but you cannot offer TCSPs without being on this register.

How do you know if you are offering TCSPs?

“If you are offering company secretarial services in order to form a company; or you act (or arrange for another person to act) as a director or secretary of a company; or you offering premises; or you are a trustee of a registered trust – then you need to register,” says Laura Neff, Regulatory Policy Manager at AAT.

The only exception is if you are already supervised for money laundering purposes by the FCA (Financial Conduct Authority) or another supervisory body. For the fully inclusive list, see the box-out below.

Why is this happening now?

The Money Laundering Regulations are being updated and the new register is part of this. “It’s being brought in because of the role TCSPs can potentially play in transferring funds for illegal purposes,” says Neff. “This isn’t just about regulations and red tape,” she adds. “It’s about fighting organised crime and the social ills associated with that – particularly drug trafficking, human trafficking and terrorist financing.”

According to the Government’s National Risk Assessment report last year, “serious and organised crime has been estimated to cost the UK tens of billions of pounds every year. That is why we must continue to crack down on dirty money, strengthening the UK’s security and prosperity as well as that of our partners overseas.”

So, should you be offering these services?

AAT members should feel confident to offer these services to their clients “as long as they understand the potential for exploitation by a high risk business or client,” Neff explains.

Might it be a safer option to avoid TCSPs altogether, if you’re not sure? “I would see it as part of your remit, as an accountant, to stay on top of this,” says Tim Pinkney, Head of Compliance at Regulation at AIA (the Association of International Accountants). “When I was in practice I used to say – do everything for the client, or do nothing at all. You want to get the full picture. If you split up your services by parcelling out elements to different bodies or unqualified accountants, you can create a weakness that is open to exploitation. The same thing can happen if you’re not scrupulous enough to undertake comprehensive due diligence – to know what the sources of funds are for capital investments, etc.”

From the professional body’s point of view, “when we do practice assessments were are very focused on this – to see how far people have drilled down to look at structures,” Pinkney says. It’s important to stress that not many practices are involved in this kind of malpractice – but when they are, the scale of it is large. “Most small solo practitioners will not be party to this kind of thing, but the issue for small companies is that as far as HMRC is concerned, you are being classed in the same vein as those who specialise in offshore trusts and convoluted structures.”

Don’t be caught out

Many accountants are likely to be offering TCSPs without knowing they need to be on the register. “People don’t realise that they are doing this,” says Pinkney. “I recently gave a talk and asked at the beginning, ‘who provides these services?’ No one said yes. But by the end I had a queue of people to talk to, as they realised they were doing some – even one – of the things on the list.”

And the penalties for non-compliance?

“If you don’t have your name on the register, you will be in breach of the regulations – and the potential knock-on effect is that you will have action taken against you,” says Adam Williamson, Head of Professional Standards at AAT. “Then there’s the discretion to impose disciplinary measures and penalties if someone has been offering the services without being registered,” adds Laura Neff.

For Pinkney, “we will probably err on the side of caution and upload all of our supervised firms on the register – irrespective of whether they’ve indicated their activities or not. Then we’ll say, if you don’t want to be on it, we’ll remove you.”

What does the regulation cover?

If you are a licensed member you should disclose to AAT if you provide any of the following Company Secretarial Services:

Forming companies

Acting or arranging for another person to act:

  • as a director or secretary of a company
  • as a partner of a partnership, or
  • in a similar position in relation to other legal persons

Providing a registered office, business address, correspondence or administrative address or other related services for a company, partnership or any other legal person or arrangement

Acting or arranging for another person to act as:

  • a trustee of an express trust or similar legal arrangement, or
  • a nominee shareholder for a person other than a company whose securities are listed on a regulated market.

Checklist – getting TCSPs right

  • Inform your professional body if you offer TCSPs – but it’s also wise to make clear if you don’t, so you can be removed from the list.
  • These regulations are likely to continue to develop. “Education is the key issue here,” says Tim Pinkney. “It’s down to professional bodies to educate their members and we are keen to ensure we do this.”
  • Personal responsibility is important. As part of your professional development, ensure you know what the rules are and make sure you keep up to speed as they evolve.

If you’re an AAT licensed member approved to offer Company Secretarial Services as part of your licence, AAT must share your company name and address with HMRC. This information will continue to be shared with them until the service is removed from your licence or you withdraw your licence.

If you provide any of these services but are not approved to do so within your AAT licence, you are in breach of the conditions of your licence. You must add this service to your licence as soon as possible and await approval before offering this service. If you provide any of these services without adding this service to your licence and awaiting approval, you will not be included on the TCSP Register and may face a financial penalty.

Mark Blayney Stuart is Business Journalist of the Year, Wales Media Awards 2017 and Former Head of Research at the Chartered Institute of Marketing.

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