The key changes in the Companies House rules
This February the government published a Corporate Transparency and Register Reform White Paper which sets out key changes in Companies House rules and affected areas. The reform intends to increase the transparency of UK companies and partnerships to prevent fraud and UK entities from being misused for international money laundering.
The government’s final response, after consultations with various bodies, sets out 58 changes across nine different areas. These reforms come alongside measures proposed by the government in the Economic Crime (Transparency and Enforcement) Bill 2022 and will be introduced through a second economic crime bill.
The next major development in corporate transparency will be Companies House reform. There are some significant changes upcoming to filing requirements, including profit and loss accounts (P&I) for small companies and micro-entities.
The key changes in the new Companies House reform include:
- The option to file ‘filleted’ accounts for small companies will be removed. That means that companies will no longer have the option to prepare and file abridged accounts and will be required to file both their profit and loss account and directors’ report.
- Micro-entities will also be required to file their profit and loss account but will continue to have the option not to file a directors’ report.
- Filing deadlines will not be reduced at the moment. However, the new legislation will be introduced to facilitate future changes.
- Dormant companies will be required to file an eligibility statement.
- All companies will be required to file accounts digitally with full tagging.
What is the outcome for small businesses?
The delay in shortening filing deadlines is a positive outcome for small businesses and micro-entities. Shortening filing deadlines could have a negative impact by putting pressure on businesses. It would be also hard to ensure high-quality information when dealing with tight deadlines. Despite that, it is important to keep an eye on updates regarding shortened deadlines that are into consideration for the future.
However, the abridged accounts option removal and requirement to file a profit and loss account on the public register is a negative outcome for small businesses. The publication of a company’s profit and loss account will make some sensitive commercial information easily accessible to a company’s competitors and create some prejudice.
There is still some time before the reform comes into effect, however, it is important to be updated with news and prepare yourself for upcoming significant changes that will affect your business. Talk to your accountant if you need additional support or request a call.