Companies could soon see changes to the way they file their accounts as part of incoming legislation to help tackle money laundering and other illicit activity.
Following the introduction of the Economic Crime Transparency and Enforcement Act 2022, one of the major developments in corporate transparency will be the reform of Companies House.
The Government has set out the reform, having previously carried out several consultations, to enhance the powers of Companies House, while improving the quality and value of financial information on the register.
One of the key changes that will impact limited companies, will be the significant changes to filing requirements, including profit and loss accounts for small and micro entities.
Key changes of the Companies House reform
Filing deadlines will not be shortened at the moment, but legislation will be introduced to facilitate future changes. The Government would like to see more timely information being reported.
Small 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, meaning that the option to file filleted accounts will be removed.
Micro-entities will also be required to file their profit and loss accounts but will continue to have the option to not prepare or file a directors’ report.
Dormant companies will be required to file an eligibility statement.
All companies will be required to file accounts digitally, with full tagging.
Changes will be introduced to limit the number of times a company can shorten its accounting reference period, to align with existing restrictions around a company extending its accounting reference period, likely meaning a company can only shorten an accounting reference date once every five years.
Another part of the reform will see Companies House have its existing limited powers to correct inconsistent or incomplete documents removed. Under the draft legislation, such documents – that aren’t consistent with information held by or available to Companies House - will be rejected. It will then be able to request the company to resolve the inconsistency and send replacement documents within 14 days.
Whilst there is not a date for some of these changes to be implemented, the legislation is imminent. It is expected that the Economic Crime Bill will achieve Royal Assent in the Spring, although some elements of may not come in immediately.
If you would like to discuss how the changes might impact your business please get in touch.
