Small and Micro Companies to File Profit and Loss Accounts

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December 2nd 2023
Tax Week 35
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Small and Micro Companies to File Profit and Loss Accounts

New legislation requires formerly exempted small companies to file full accounts on public register.

Reforms affecting how incorporated companies file accounts were proposed in the Autumn of last year. The Economic Crime and Corporate Transparency Bill was put together in order to plug a hole in the lax identification and verification protocols of Companies House - alongside opening up the depth of information available when vetting companies on the register.

The aforementioned bill took just over a year to pass but received Royal Assent last week and will soon provide Companies House with new powers to tackle fraudulent firms masquerading as legitimate concerns.

It comes as the laughable vetting checks for setting up a limited company allowed firms with directors named 'Donald Duck' to pass through the gates - lax checks that made activity such as money laundering prevalent.

The move will take Companies House from being merely a register to a regulator of sorts - and with a new government budget to back it up to boot. Fees for registering companies may also be increased to fund the more in-depth role of the 'registry' such as integrating with third parties to verify information deemed suspicious.

Reporting duties for companies previously allowed to submit the minimum of information in published accounts will soon also be expanded - for the first time small (and micro) companies will be required to submit full accounts including director's report and a profit and loss statement. So no more abridged accounts and a very visible view of a companies turnover on the public register - something small business owners may not be comfortable with.

Another part of the legislation states that accounts will need to be filed using software that prepares and 'digitally' submits directly.

The bill being passed does not give a time-frame to when the increased checks and reporting duties will be implemented, so there is a possibility that the very fraudsters the bill is attempting to thwart may bullrush the service to get companies registered before the gates finally close.

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