Filings and paperwork handbook
Economic Crime and Corporate Transparency Act
As part of the reforms that will be introduced by the Economic Crime and Corporate Transparency Act (which completed its journey through Parliament and received Royal Assent on 26 October 2023), Companies House will make several changes with the aim of improving transparency by making more financial information available to the public.
Changes to methods for account filing
Companies House has begun work to move to software-only accounts filing. All other filing routes for accounts (including paper filing) will be removed.
Accounts will have to be filed digitally and fully tagged using iXBRL. This means that the data is electronically tagged and categorised to a specialist accounts taxonomy.
Companies House has stated that it recognises that the changes may be challenging for small companies and micro-entities that don't already file digitally. It has promised to work with software partners to open up digital filing options for all account types.
It has advised that it will publish details about the roll-out of software-only filing. Companies can opt to make the switch now as some software is already available for use. Free and low-cost options will be available to eligible companies, and Companies House will signpost these options alongside roll-out details.
Changes to small company filing options
Another change will be the filing options available for small and micro companies (definitions here).
Currently, a small or micro company can prepare either abridged or full accounts for its members. It doesn’t have to file a copy of its profit and loss account and/or the director’s report with Companies House.
The exact nature of the changes will rely on secondary legislation that is yet to be passed.
However, it’s anticipated that the Companies House filing system will change in the following ways:
- Account filing options will be reduced to two options: micro-entities and small companies. There will no longer be abridged and “filleted” accounts options. Micro-entities and small companies will have to file enough information to confirm they qualify for the accounting category that they claim to fall within.
- Dormant companies will be required to file an eligibility statement confirming that the company isn’t trading and fulfils the criteria for filing dormant accounts.
- Small companies will be required to file a balance sheet, their profit and loss account, and directors’ report. Micro-entities will have to file a balance sheet and their profit and loss account (the directors’ report will be optional).
- Companies relying on an audit exemption will have to provide an additional statement by the directors on the balance sheet to confirm the exemption being relied on, and that the company satisfies the qualifying criteria.
- The Registrar will have the power to require all component parts of a filing to be delivered together to allow the digital filing of more complex accounts.
- The number of times a company can shorten its Annual Reporting Period will be limited.
It’s thought that the requirement for small companies and micro-entities to file profit and loss accounts won’t be too burdensome as this information should already be available for tax purposes. It may actually prove beneficial for businesses – placing this information on the public register should help lenders and creditors determine the creditworthiness of small businesses, hopefully increasing the likelihood of finance offers.
We’ll keep a close eye on developments, so rest assured that we’ll have everything you need in time for the changes.
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