Small Company P&L Filing On The Horizon
Some changes are on the horizon for small companies and they might not be everyone’s cup of tea.
Thanks to the Economic Crime and Corporate Transparency Act passed last week (30 October 2023) small companies will now have to deal with the extra task of filing a profit and loss account with Companies House.
This new legislation has given the green light to stricter reporting rules, making it mandatory for small companies and micro-entities to file a profit and loss account. Small companies will also have to file a director’s report. This means that turnover information and profitability will now be publicly available and the option to prepare abridged accounts disappears.
Is your small company affected?
For the purposes of these new rules; small companies meet two of the following criteria:
- turnover of £10.2 million or less
- £5.1 million or less on the balance sheet
- or 50 employees or fewer.
Micro-entities, meanwhile, need to meet two of the following criteria:
- turnover of £632,000 or less,
- £316,000 or less on the balance sheet
- or 10 employees or fewer.
The specifics will become clearer when the secondary legislation is rolled out (no timescale yet), which will outline the form and content of the profit and loss account you need to send to Companies House.
And if you’re a director of a company using audit exemption rules (like dormant companies), be ready to provide extra information, including confirming the company qualifies for the exemption.
The government is also looking to make digital filing and full tagging of financial information a requirement and will reduce the frequency with which a company can shorten its accounting reference period.
This change is part of a bigger plan to tackle fraud. Companies House is getting more powers, including identity verification for all new and existing registered company directors, persons of significant control and those delivering documents to the registrar.
To create a more reliable and accurate companies register with filed information aligning better with what companies have already prepared.
The government believes these reforms strike a balance between transparency and minimising the burden on businesses, while also fixing the issue of inaccurate or insufficient information on the register. Plus, filing more information will help prevent misuse for things like money laundering and fraud and improve the reliability of the information available.
Compliance made easy
In a rapidly evolving financial landscape, staying on top of changing accounting legislation is essential. At Moorgate, we understand the challenges that businesses and individuals face when it comes to compliance and financial reporting. Our team of expert accountants are here to provide you with the guidance and advice you need to ensure your financial affairs are in order. Please call us for a free 30-minute consultation.
Moorgate Chartered Accountants