What do Companies House reforms mean for small businesses?
2-minute read
How limited companies file their accounts is changing as a new bill looks to reform how Companies House operates in the UK.
The Economic Crime and Corporate Transparency Bill is introducing new measures to improve transparency of company information and tackle economic crime.
But what will the proposed legislation mean for small businesses? Read on for everything you need to know.
Streamlined filing options for small companies
Limited companies must file accounts to Companies House every year to demonstrate performance during the accounting period.
Your accounting period is normally the same as the financial year covered by your company’s annual accounts – but it might be different in some circumstances, for example your first year of trading.
Under the proposed changes, it will only be possible to file digitally using approved software.
And there will just be two filing options for small businesses: micro-entities and small businesses. This means there will no longer be the option to file ‘abridged accounts’ without a directors’ report and profit and loss statement.
The government says this will help to avoid confusion and reduce costly mistakes. It says it will also improve the value of the information on the register.
Filing profit and loss accounts
As a limited company you’ll be familiar with filing profit and loss accounts for HMRC, however all businesses will soon need to provide this information to Companies House too.
It’s not yet clear how detailed the accounts will need to be for Companies House but the government hopes this will increase transparency about registered companies.
Companies House reforms – at a glance
Companies House registers limited company information, including directors and business accounts.
Here’s an overview of the key measures set to be introduced:
- filing profit and loss accounts will be compulsory for all small companies
- accounts will need to be filed digitally – it won’t be possible to file any other way
- identity verification will come in for anyone setting up, running, or controlling a company
- Companies House will be given power to check, remove, or decline information
- the body will also have more powers to challenge suspicious information and cross-check with other public and private sector bodies
By bringing in measures like identity verification the government says it will give businesses assurance that the information on the register is genuine and stop fraudulent companies being registered.
Note that if you currently have audit exemption, you’ll need to provide an additional statement by the directors on the balance sheet.
When will the changes come in?
The date the Companies House reforms are coming in isn’t yet known but is predicted for some time in spring 2023.
Currently in the Committee Stage in the House of Lords, the bill still has a few more stages to go through parliament before it’s given Royal Assent. This is the stage when the proposed legislation becomes law.
Keep an eye on the Knowledge centre for future updates, and sign up to our newsletter to be the first to know about news affecting small businesses.
Companies House Chief Executive Louise Smyth said: “We welcome the measures outlined in this Bill, which represent the most significant and far-reaching changes to the UK’s company register in over 170 years of history and will enable us to play a much stronger role in making the UK a great place to do business.
“If agreed, these changes will allow us to actively improve and maintain the integrity of the register like never before, inspire greater trust in our data, crack down on economic crime, and further drive confidence in the UK economy.”
Read more guides for small businesses
This article is intended as a guide. Always speak to a professional accountant or financial adviser if you’re not sure of anything.
How do the Companies House reforms affect your business? Let us know in the comments.
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Written by
Catriona Smith
Catriona Smith is a content and marketing professional with 12 years’ experience across the financial services, higher education, and insurance sectors. She’s also a trained NCTJ Gold Standard journalist. As a Senior Copywriter at Simply Business, Catriona has in-depth knowledge of small business concerns and specialises in tax, marketing, and business operations. Catriona lives in the seaside city of Brighton where she’s also a freelance yoga teacher.
We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer
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