Since 2022, the Economic Crime and Corporate Transparency Bill has been making its way through Parliament.
Companies house have confirmed that it will be changing the way accounts are filed for micro entities.
Currently a small or micro company that prepares abridged or full accounts for its members does not have to file a copy of its profit and loss account and/or the director's report with Companies House.
It is considered that this minimal level of disclosure has the potential to appeal to fraudsters wishing to present a false image of the company.
Research published by the Home Office has calculated that the cost of organised fraud to businesses and the public sector in the UK is £5.9 billion a year. Small and micro companies make up most of the register, so any meaningful changes to the quality of the information on the register will impact them. Improving transparency and having better quality information will make it easier to spot fraud when it happens, and will also help to support business growth.
The lack of detail in small and micro-accounts has made it impossible to confirm eligibility to file under a specific regime and claim audit exemptions. It has also made it difficult for lenders and creditors to determine the creditworthiness of small businesses. This can deter them from offering finance which hinders small business growth.
Companies house will be reducing account filing options to just two: micro-entities and small companies. Under the new measures, the option for abridged accounts will be removed.
The detail and format of the profit and loss account filings will be set out in secondary legislation. This is being developed in consultation with business and accountancy groups.
Comments