Companies House reforms and how they will impact SMEs
From 4th March 2024, limited companies will be required to demonstrate performance during the accounting period (which is usually the same as the financial year covered by your company’s annual accounts – although this can be different in circumstances such as first year of trading etc).
Under the new legislation, filing will only be possible using Companies House approved software and there will be just two filing options for small businesses – micro entities and small businesses. The option to file ‘abridged accounts’ without a directors’ report and profit and loss statement will no longer be available. Businesses submitting audit extensions will now need to provide an additional statement from the directors to support this.
Currently is it only limited companies who are required to file accounts and submit profit and loss statements. The reform will require all businesses to adhere to these filing rules – with the government hoping to reduce costly mistakes, improve transparency, limit economic crime and improve data on the Companies House register. Additional measures such as identity verification will stop fraudulent companies being registered and provide other businesses with the assurance that the information on Companies House is genuine.
The government has confirmed that the changes will be phased to ensure a smooth transition.
Companies House reforms – at a glance
- Filing profit and loss accounts will be compulsory for all small companies
- Accounts will need to be filed digitally, using approved software. Keep your eye on changes here
- Companies House will have the ability to challenge, request supporting evidence or reject any information that seems suspicious or inconsistent with data already held on the register
- Data sharing between other government bodies and law enforcement agencies to information
- There will be restrictions on company names such as those that include computer code which are often intended to facilitate crime or suggest connections to overseas governments
- All companies will need to maintain an ‘appropriate address’ for its registered office. PO boxes will no longer be acceptable
- All companies will need to supply a registered email address which can be verified
- All persons wishing to incorporate a company, will need to confirm that they are doing so for a lawful purpose and each year the company will need to confirm that all future activities will be lawful
Companies House Chief Executive Louise Smyth said: “We will now play a much greater role in preventing further abuse of the register. We will be taking unprecedented steps to crack down on fraudulent activities, help victims quicker and clean up the register by removing information we know to be incorrect.
“This will underpin our efforts to improve the quality and reliability of our data, which will in turn hugely increase the value of the register for businesses across the UK and beyond.”
This blog is a guide only, and organisations should always speak to a professional accountant or legal advisor if they are unsure of anything.
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