PSC Penalties Are Serious
Failing to maintain an accurate PSC register is a criminal offense under section 1112 of the Companies Act 2006. Directors and companies can both face criminal fines (unlimited in England and Wales, up to level 5 on the standard scale in Scotland and Northern Ireland). In 2024-2025, Companies House issued thousands of PSC-related penalties, and the Economic Crime Act 2023 has made enforcement even stricter.
What is a PSC Register?
The PSC register, introduced by the Small Business, Enterprise and Employment Act 2015 (coming into force April 2016), is a legal record of everyone who has "significant control" over your company[1]. This includes major shareholders, directors with voting power, and anyone else who controls the company behind the scenes.
Who Qualifies as a PSC?
A person or entity is a PSC if they meet one or more of these conditions:
- Hold more than 25% of shares in the company
- Hold more than 25% of voting rights
- Have the right to appoint or remove a majority of directors
- Otherwise exercise significant influence or control over the company
- Hold more than 25% of shares or voting rights in a trust or firm that controls the company
Note the key threshold: more than 25%, not 25% exactly. Someone with exactly 25% is not automatically a PSC, but someone with 25.1% is.
What Information Must Be Recorded?
For each PSC, you must record and file with Companies House:
- Full name and date of birth
- Nationality and country of residence
- Service address (can be the registered office)
- Residential address (not made public)
- Date they became a PSC
- Nature of control (which of the 5 conditions they meet)
- Percentage of shares held and/or voting rights
The Most Expensive PSC Mistakes
Mistake #1: Missing the 14-Day Notification Deadline
The Law: When someone becomes or ceases to be a PSC, you have 14 days to update your PSC register and notify Companies House[2].
The Reality: Most companies discover PSC changes months later—often during annual accounts preparation—and file them retrospectively. This is a breach of the 14-day rule.
Real Example
A director sells 30% of their shares to a new investor on March 1st. The PSC register should be updated by March 15th, and Companies House should receive the PSC01 form by the same deadline. If the accountant doesn't file until June when preparing accounts, that's a 3-month breach—exposing the company and directors to penalties.
Penalty Risk: Criminal fines on summary conviction (unlimited in England and Wales, up to level 5 on the standard scale in Scotland and Northern Ireland). Both directors and the company can be fined.
Mistake #2: Incorrect Shareholding Calculations
Many companies get the math wrong, particularly when:
- Share classes have different voting rights (one share = multiple votes)
- There are treasury shares (which don't count in the calculation)
- Shares are held in trust or nominee arrangements
- There are complex group structures with indirect ownership
Common Calculation Error
Company has 100 ordinary shares. Director A holds 24 shares, Director B holds 26 shares, Director C holds 50 shares. Many companies incorrectly record only Director C as a PSC because they have exactly 50%. But Director B (26%) is also a PSC—they hold more than 25%. Director A is not a PSC.
Penalty Risk: If the PSC register is inaccurate, every day it remains wrong is a continuing offense. This can stack up to significant fines, especially if discovered during a Companies House compliance check.
Mistake #3: Not Identifying Corporate PSCs
Companies can also be PSCs. If a company owns more than 25% of your shares, that company is a PSC and must be registered—unless it's a "relevant legal entity" (RLE) that's already subject to disclosure requirements (e.g., a UK listed company).
The mistake: Many companies only list individual people and forget about corporate owners. This is particularly common in:
- Parent-subsidiary structures
- Joint ventures with institutional investors
- Private equity-backed companies
- Family holding company structures
What You Must Do: If a company is a PSC, you must register it unless it qualifies as an RLE, in which case you register the RLE instead and trace through to find individual PSCs behind it.
Penalty Risk: Failure to identify and register corporate PSCs is treated as seriously as missing individual PSCs. Criminal fines apply under section 1112 of the Companies Act 2006.
Mistake #4: Ignoring Indirect Control
Significant control isn't always about shareholding. Someone who doesn't own any shares can still be a PSC if they:
- Have the right to appoint or remove directors (e.g., through a shareholders' agreement)
- Exercise significant influence through contracts, agreements, or informal arrangements
- Control the company through a trust or partnership
Complex Example: Shadow Directors
A retired founder no longer holds shares but maintains a shareholders' agreement giving them the right to appoint 3 of 5 directors. They're a PSC based on director appointment rights, even with zero shares. Many companies miss this because they only look at the share register.
Penalty Risk: Non-obvious PSCs are the hardest to identify but carry the same penalties if missed. Companies House expects you to conduct thorough investigations.
Mistake #5: No PSC Registered at All
Every company must have either:
- At least one PSC registered, OR
- A statement explaining why there is no registrable PSC (rare but possible)
The mistake: Some companies, particularly newly incorporated ones or those that have undergone recent ownership changes, have blank PSC registers. This is almost never correct.
Valid Reasons for No PSC:
- The company is owned entirely by listed companies or other RLEs
- Ownership is so dispersed that no one meets the 25% threshold (rare in SMEs)
- The company is in the process of identifying PSCs (temporary)
If none of these apply, having no PSC is a red flag for Companies House and can trigger compliance investigations.
Penalty Risk: Companies House can prosecute directors for failing to take reasonable steps to identify PSCs. Maximum fine: unlimited for the company, up to £5,000 for directors.
Mistake #6: Not Updating After Share Transfers
Share transfers happen all the time: new investors come in, founders sell down, employee share schemes vest. Every transfer that crosses the 25% threshold (up or down) triggers a PSC notification requirement.
Scenario: Employee Share Scheme
A company grants options to 50 employees. When exercised, the founder's stake drops from 60% to 24.8%. The founder is no longer a PSC and must be removed from the register within 14 days. The company must also file a PSC07 (ceased to be a PSC) form. Many companies discover this months later during accounts prep—too late.
Best Practice: Update the PSC register immediately after every share transfer is approved, not at year-end when the accountant notices.
Mistake #7: Filing the Wrong PSC Form
There are multiple PSC forms for different situations:
- PSC01 – Notification of a new PSC
- PSC04 – Change to PSC details (e.g., address change)
- PSC07 – PSC ceases to be a PSC
- PSC08 – Notification of a relevant legal entity (RLE)
- PSC09 – Statement that there is no PSC to register
Using the wrong form will result in rejection by Companies House, wasting time and potentially causing you to miss the 14-day deadline while resubmitting.
Common Error: Using PSC04 (change of details) when a PSC's shareholding changes percentage. If the change affects their nature of control, you should file PSC01 and PSC07 to remove the old entry and add the updated one.
Economic Crime Act Impact on PSC Requirements
The Economic Crime and Corporate Transparency Act 2023 significantly strengthened PSC enforcement[3]. Key changes include:
- Identity verification for all PSCs from 2026 onward
- Enhanced powers for Companies House to query and reject inaccurate PSC information
- Stronger penalties for providing false or misleading PSC information
- Mandatory checks on PSC data against other government databases
- Power to annotate the public register where PSC information is disputed
What this means: Getting PSC information wrong is no longer just a filing technicality. Companies House now has the resources and authority to actively verify PSC data and punish errors.
Penalty Structure for PSC Failures
Criminal Penalties
Failing to comply with PSC requirements is a criminal offense under section 1112 of the Companies Act 2006:
- Company officers (directors) liable on summary conviction to unlimited fines in England and Wales, or fines up to level 5 on the standard scale in Scotland and Northern Ireland
- Company itself liable on summary conviction to unlimited fines in England and Wales, or fines up to level 5 on the standard scale in Scotland and Northern Ireland
- For continued contravention: daily default fines (one-tenth of level 5 on the standard scale in Scotland/Northern Ireland)
- Each day of continued breach is a separate offense (daily fines can accumulate)
Civil Financial Penalties
Companies House has powers to issue fixed civil penalties for PSC failures. The penalty structure is set out in regulations, and notices are issued directly by Companies House without court proceedings.
Penalties can be imposed on both the company and individual officers. You can appeal within 28 days of receiving a penalty notice.
Note: Under the Economic Crime Act 2023, enforcement powers were significantly strengthened, making PSC compliance more strictly monitored.
Indirect Costs
Beyond fines, PSC failures can cause:
- Strike-off proceedings if Companies House believes records are unreliable
- Rejection of other filings (accounts, confirmation statements) until PSC issues are resolved
- Difficulty obtaining bank loans or investment (due diligence flags PSC problems)
- Reputational damage (PSC failures appear on public record)
- Director disqualification proceedings in serious cases
- Professional indemnity claims against accountants who failed to advise properly
Best Practices for Maintaining Accurate PSC Records
PSC Compliance Checklist
What to Do If You've Made a PSC Mistake
If you discover your PSC register is wrong or incomplete:
PSC Error Correction Timeline
Immediately: Conduct a Full PSC Review
Review all shareholders, voting rights agreements, and control arrangements. Identify all PSCs—past and present.
Within 48 hours: Update Your Internal PSC Register
Correct your company's own PSC register to reflect the accurate position.
Within 7 days: File Corrections with Companies House
File the appropriate PSC forms (PSC01, PSC07, etc.) to bring the public register up to date. Use the correct effective dates.
Within 14 days: Document the Error and Correction
Keep written records of what was wrong, when you discovered it, and what steps you took to correct it. This helps if Companies House investigates.
Within 30 days: Consider Voluntary Disclosure
If the error was serious or prolonged, consider proactively contacting Companies House to explain and demonstrate good faith. This can reduce penalties.
Should You Tell Companies House?
If you correct a PSC error before Companies House notices, you're less likely to face prosecution. Voluntary disclosure shows you're taking compliance seriously. However, seek legal advice if the error could constitute fraud or deliberate concealment.
How CHWatch Helps Prevent PSC Mistakes
PSC deadlines are easy to miss because they're triggered by events (share transfers) rather than fixed dates. Traditional calendar reminders don't work.
CHWatch monitors your company's public filings and alerts you when:
- Confirmation statements are due (which must include up-to-date PSC information)
- Annual accounts deadlines approach (accountants often spot PSC errors during accounts prep)
- Any filing is rejected by Companies House (often due to PSC data mismatches)
- Your company's status changes in a way that might indicate compliance issues
While CHWatch can't monitor your internal share register (which isn't public), it provides an essential safety net by tracking the public filing deadlines that PSC changes affect.
Set up monitoring in under 60 seconds and receive deadline alerts via email, Slack, or webhook. Never miss another PSC notification deadline.
Key Takeaways
- PSC failures are criminal offenses with fines up to £5,000 for directors and unlimited for companies
- You have only 14 days to notify Companies House when someone becomes or ceases to be a PSC
- Common mistakes: missed deadlines, incorrect calculations, ignoring indirect control, and missing corporate PSCs
- The Economic Crime Act 2023 has made enforcement much stricter—expect more penalties
- Update your PSC register immediately after any ownership change, not at year-end
- Keep documentation showing you've taken reasonable steps to identify all PSCs
- If you discover an error, correct it immediately and consider voluntary disclosure to Companies House
- Professional advice is essential for complex ownership structures, trusts, and international arrangements
References
- [1]Companies Act 2006, Part 21A - Information about people with significant control Available at:www.legislation.gov.uk/ukpga/2006/46/part/21A
- [2]GOV.UK: People with significant control (PSCs) - official guidance Available at:www.gov.uk/guidance/people-with-significant-control-pscs
- [3]Economic Crime and Corporate Transparency Act 2023 Available at:www.legislation.gov.uk/ukpga/2023/56/contents/enacted
Disclaimer
This guide is for informational purposes only and does not constitute legal advice. PSC requirements can be complex, especially for companies with trusts, corporate shareholders, or international structures. For specific advice about your company's PSC obligations, consult a qualified solicitor or company secretary. Information is current as of February 2026.