The Economic Crime and Corporate Transparency Bill is introducing new measures to improve the transparency of company information and tackle economic crime. This means how limited companies file their accounts is changing. But what do the proposed changes mean for small businesses?

Fewer filing options for small businesses

Companies House require limited companies to file accounts annually to demonstrate performance during the accounting period. Your business accounting period is normally the same as the financial year covered by your company’s annual accounts. But in some circumstances, it might be different, for example, your first year of trading.

Filing options for small businesses will reduce to two options: micro-entities and small companies. Under the new measures, ‘abridged accounts’ will no longer be an option without a directors’ report and profit and loss statement. Using approved software to file digitally will only be the route for filing accounts.

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

A quick overview of the key measures set to be introduced:

• filing profit and loss accounts will be mandatory for all small companies
• software-only accounts filing will be the only option permitted, this will see the removal of other filing routes for accounts
• identity verification will come in for anyone setting up, running, or controlling a company
• Companies House will be given the 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

If you currently have an 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 Companies House reforms come into effect is currently unknown. The bill is in the Committee Stage in the House of Lords and still has a few more stages to go through parliament before it’s given Royal Assent. The stage when the proposed legislation becomes law.