Further reforms in Companies House filing requirements will see small companies and micro entities forced to file full profit and loss accounts from 2028, despite concerns about the extra burden the move will place on the UK’s smallest businesses.
Currently there is an exemption for small businesses and micro entitles; these are measured using a combination of turnover, balance sheet and employee numbers. To qualify, a small company must meet two of the following criteria: annual turnover of £15 million or less, balance sheet total of £7.5 million or less, and 50 or fewer employees.
In addition to the requirement to file profit and loss accounts from April 2028, all companies will be required to file their annual accounts via commercial software, with the Companies House web and paper-based filing systems will no longer be available for this purpose (although it will still be available for non-accounts filings, such as confirmation statements and updates to director details).
The government says the move aims to ‘improve the transparency, accuracy and reliability of data on the companies register’.
However, crucially companies will retain the ability to prevent their profit and loss information from being placed on the public register. While the full accounts will need to be submitted to Companies House, there will be an option to ‘opt out’ of publication of the profit and loss account. In these cases, the information will still be accessible to HMRC and law enforcement bodies, but not the general public.
In practice this will be managed through commercial software, which will allow companies to ‘tag; the relevant sections of the accounts so that the profit and loss information is excluded from public view. This means that, for many businesses, commercially sensitive information will not need to be made publicly available, despite the expanded filing requirements.
The option for companies to file abridged accounts will no longer be available, and those companies claiming an audit exemption will need to provide a ‘strengthened’ eligibility statement. All of the component parts of the filed accounts and reports will have to be submitted together.
These changes will undoubtedly add an extra burden for small companies and micro entities. However, the ability to keep profit and loss information off the public register should provide some reassurances for businesses concerned about confidentiality or sharing commercially sensitive information. The government has at least decided to push the implementation date back from April 2027 to April 2028, giving them more time to prepare. Given the number of times the direction of travel has shifted so far, we will reserve judgement on whether this timetable proves to be the final one.