Under the reforms of the Economic Crime Bill, the Companies House rules will change in future to enforce stricter filing requirements on companies.
The Bill has been introduced to Parliament and is expected to obtain Royal Assent by next spring, although some elements may not come into force immediately.
To help you understand what changes might be on the horizon, we have summarised them below:
Simplified filing requirements
Small companies and micro-entities currently share filing obligations within the same section of the Companies Act 2006.
The Bill will amend this by providing two separate sections within the Act that seek to simplify and streamline their requirements.
Small companies, as defined by the Act, will no longer have the option to prepare and file abridged accounts.
Instead, they will be required to file a profit and loss account and directors’ report. This will remove the option to file what are known as ‘filleted’ accounts.
Similarly, micro-entities will be required to file a profit and loss account, but won’t have to prepare or file a directors’ report.
These measures are intended to make the finances of even the smallest companies more transparent.
Audit exemption statement
Under the Bill, directors will need to identify their exemption from an audit, which will confirm that the company is eligible for the exemption.
This reform will minimise the risk that entities are falsely claiming exemption from an audit.
New integrity powers
Companies House will be afforded new powers under the Bill to verify the integrity of the documents it receives.
This will remove its existing powers to correct documents that contain inconsistencies or appear incomplete.
In its place, documents that are no longer consistent with information held by or available to the Registrar will be rejected outright, where the Registrar doubts whether all requirements relating to its contents have been complied with.
Documents categorised in this way will be treated as having not been delivered and the Registrar will be able to request that a company take all reasonable steps to resolve the inconsistency by delivering replacement or additional documents within 14 days.
Supporting digital filing
The Bill also includes clauses that are intended to improve the facilitation of the electronic delivery of documents to the Registrar.
This includes new powers that will allow Companies House to mandate the method by which documents are delivered.
However, the latest version of the Bill does not require companies to submit digitally tagged accounts in iXBRL format, it does leave the door open for this in future.
The Bill also permits the Registrar to request filings consisting of more than one document to be filed together.
These reforms work alongside the wider 2020 to 2025 Companies House strategy, changes for which have already taken place including the new online filing system, which includes:
- Multi-factor authentication
- The ability to link your company to your WebFiling account gives you more control over your filings
- Being able to digitally authorise people to file on your behalf on WebFiling, and to remove authorisation
- To view who’s digitally authorised to file for your company
- An option to sign up for emails to help you with the running of your company.
WebFiling is an online service that Companies House provides, designed to make the submission of official paperwork easier and paper-free.
What next?
The final version of the Bill, once it has been through Parliament, is expected in the spring. Major changes aren’t anticipated and many of the measures outlined above are likely to come into force immediately.
While we will ensure you remain up to date on these changes as they are implemented, you should begin to prepare now for these reforms to Companies House legislation. We have identified a number of opportunities to keep your profit and loss results confidential which we can explore once the legislation is enacted.
If you need support or advice on any of the reforms outlined in the Bill, please speak to us.
