As 2025 kicks off in full force, professional services firms will no doubt be turning their attention to winning new work to drive revenue throughout the new calendar year. However, firms should first make sure their house is in order and that they do not fall foul of these important compliance deadlines for the first quarter.
Overseas LLPs: file your returns this month
As part of the overseas entity registration regime, overseas LLPs holding certain interests in UK real estate were required to register information regarding their beneficial owners under the Economic Crime (Transparency and Enforcement) Act 2022. We discuss these obligations in our article here.
A registered overseas entity has a duty to ensure the information it has submitted to Companies House remains accurate. Each registered entity will also need to update the registrar of companies on annual basis, no later than 14 days after the anniversary of the date on which it first registered.
Since the deadline for first registration was 31 January 2023, it is likely that most firms will now need to make their first annual return to the registrar regarding any changes to its registration or beneficial owners, or confirmation that the entity has no reasonable cause to believe that anyone has become or ceased to be a registrable beneficial owner during the previous 12 months.
All registered overseas entities should ensure that they submit this return promptly.
Law firms: check your authorisation before 29 January
Inadvertent loss of authorisation remains a key pitfall for law firms which are authorised by the SRA as a recognised body (as most law firms are). It is a surprisingly easy mistake to make: if the firm fails to renew the practising certificates or registered foreign lawyer (RFL) registrations of all of its partners, it will automatically lose its SRA authorisation after 90 days of the failure persisting, due to section 18(3) of the Legal Services Act 2007. A similar issue can arise if an ABS ceases to have a non-authorised person.
As we note in our article here, all it takes is one missed registration, for example a new partner who is not opted in to bulk renewal, to trigger section 18(3) and the loss of the firm’s authorisation.
Since the practising year ends on 31 October, any firms which are recognised bodies and which inadvertently have one or more partners who fail to renew their practising certificates or RFL registrations will lose their authorisation after 29 January.
We therefore recommend all law firms double-check their entire population of partners (in every office) to ensure that all of them have been renewed for the current practising year.
Otherwise, firms face losing their authorisation, which could have serious consequences such as an inability to practise in certain areas of law, reputational damage, and potential repercussions for clients and professional indemnity insurance.
These checks should ideally be completed ahead of 29 January, since time should be allowed to submit and have processed any missing renewals. RFL registrations could take around 30 days or more to process, and cannot be submitted until the individual has obtained certificates of good standing from their local bar associations. If this cannot be completed in time, then the relevant partners should be removed from the partnership or LLP until they have the necessary approvals to be re-admitted.
Salaried members’ rules in the new tax year
At the beginning of each tax year on 6 April, UK LLPs are required to assess whether their members should be taxed as employees or as self-employed. This in part depends on how much of their remuneration represents “disguised salary” under the legislation known as the “salaried members rules”.
Firms which assess remuneration on a calendar year basis may now be reviewing remuneration and so trigger a test date imminently.
UK LLPs should therefore start thinking about assessing their membership against the three tests set out in the rules, which we discuss here. Note that the basis for calculating capital requirements is likely to need additional thought than in prior years, given HMRC has indicated it will disregard capital contributions made purely to satisfy the relevant salaried member test.
Policies and risk assessments
There are other important tasks and matters without fixed deadlines which firms should keep under review and revisit annually.
For example, a firm’s practice-wide risk assessment, as required under regulations 18 and 18A of the anti-money laundering regulations should be reviewed and updated frequently.
Many law firms have recently been issued with fines by the SRA for failing to have an adequate practice-wide risk assessment in place. It is recommended that this be reviewed on an annual basis to account for changes in the firm’s practice areas, the use of new technologies or updates to the law, national risk assessments or applicable guidance.
Other policies and procedures should also be considered, for example to take into account the recent introduction of the legal duty to take reasonable steps to prevent sexual harassment, or where policies state they are to be reviewed annually.
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