A planned overhaul of filing requirements for small and micro companies at Companies House means significant changes ahead, as all companies will be required to file a profit and loss account, balance sheet and directors report.
There is still no confirmed date for the introduction of these changes, however it is seen as a priority by the government and will be part of the Economic Crime Bill.
The framework itself will also be simplified, with the filing options reduced to just two: micro-entities and small companies, with the removal of abridged and filleted accounts. 4.4million companies are currently registered with Companies House, with the majority or these being small or micro, so it is evident that the reforms will have a substantial impact.
Other changes include small companies no longer having the option to file multiple accounts with different government departments – they must just prepare and submit a single set of accounts. The option of a ‘File Once’ approach is being explored, whereby companies will file accounts in a central place.
The current filing period of nine months after the end of the reporting year for a private company and six months for a public company will remain the same.
Reducing fraud and increasing transparency
The adjustments are part of a strategy to reduce fraud and increase transparency over company creation and associated data. Companies House will have more authority to investigate suspicious director appointments or filings, sharing with law enforcement and other government bodies.
It is intended that there will be an identity verification service that will make anonymous filings more difficult. Anyone setting up, managing, owning and controlling companies will need to have a verified identity with Companies House or have registered their identity with an anti-money laundering supervised third-party agent. Individuals who do not comply with the new requirements may be subject to director bans for breaking rules on company registration.
There will be increased clarity around company information, as all small companies will be filing their profit and loss account and balance sheet. This will make it easier for creditors and consumers to make informed decisions when assessing company information.
Summary of key changes
- Simplification of framework, with just two filing options: micro-entities and small companies;
- Obligation to file a profit and loss account and balance sheet;
- Requirement to file a directors report;
- Companies to use full iXRBL tagging of accounts information on the register (Companies House will reject accounts that do not meet the required tagging standard);
- A single set of accounts to be prepared and submitted;
- Those setting up, managing and controlling companies to have a verified identity with Companies House or a supervised third-party agent; and
- Corporate directorships will be restricted to entities registered in the UK.