SIC Codes - Nature of a Company's Principle Activities

Companies House SIC codes (Standard Industrial Classification of Economic Activities) are 5 digit numbers used to identify the nature of a company’s principle activities which it is engaged in. The primary event which gives rise to their use is the company’s annual return which must be completed within 28 days of the anniversary of the company incorporation date.

A popular misconception among some registering a new company is that they must state the SIC code or intended nature of their company’s activities at the time of setting up the company.

This is in fact not the case as Companies House does not require, nor do any online or manual incorporation facilities allow for the input of an SIC code at the time of the company registration.

It is sometimes the case, particularly when ordering a certificate of good standing to provide evidence of the company directors, shareholders, registered office and issued share capital to also require the inclusion of an SIC code and description.

To this end, it is not always feasible to wait until the anniversary of the incorporation to then prepare and annual return and input the resultant SIC code. In such circumstances an annual return can be prepared early and thus enable to company to have on records a description of its business activities.

Multiple SIC Codes

When a company engages in multiple business activities it may find that a single SIC code is insufficient to translate the range of trading areas in which it is involved. Simple facilities therefore exist to select and enter multiple SIC codes to represent each significant business activity.

Changes to SIC Codes

The current format of SIC codes consists of 5 digit numbers ranging from 01110 (formerly 0111) depicting “Growing of cereals (except rice), leguminous crops and oil seeds” to 99999 (previously 9999) which is the designation for a dormant company.

Prior to the current list, SIC codes were represented as 4 digit numbers. Although the new coding system has been named SIC 2007, its introduction will actually take place in late 2011, specifically 1st November 2011.

The transition from the former 2003 system to the new 2007 regime will allow for the transposition of 2007 SIC codes submitted prior to 1 November 2011 to their equivalent constitution under the old arrangement. For example if the code 99999 is included on an annual return submitted in September 2011, Companies House will accept it as the 4 digit code 9999.

On or after 1 November 2011 the enforcement and adherence to the new 5 digit SIC coding system will adopt a similar approach to the one when the Companies Act 2006 prohibited UK companies from having sole directors who were themselves a corporation.

The change will become mandatory at the time companies submit their annual returns. Thus should Form AR01 contain a redundant 4 digit code it will be rejected whilst documents processed through the Webfiling format will make the input of a new system code a prerequisite for the successful completion of the annual return document.

Use of SIC Codes

The requirement for UK limited companies to provide SIC codes is driven by the Governments interest to understand the economic activities prevailing in the country. The Office for National Statistics compile and publish SIC code data obtained through the corporate compliance mechanisms to a wide range of other official bodies and private data stores.

Thus the information on the Nature of Principle Activities provided by UK companies is held, stored and used (to varying degrees) in national fiscal policies.