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Accounts filing options are changing for small and micro companies – What you need to know
February 27, 2023

1. Introduction

Recent announcements from Companies House have detailed various changes firms should be mindful of, including those that will affect small or micro companies. One of the most significant changes coming into force is the change to the level of detail small companies are allowed to make when filling accounts.

2. Accounts Filing options for Small and Micro Companies

Due to the Economic Crime and Corporate Transparency Bill, which has been making its way through Parliament since September 2022, Companies House has reacted by implementing various changes to the way they are operating. The changes set out in the Bill aim to improve transparency by making more financial information available to the public. The changes focus on tackling economic crime and providing more information for enforcement agencies. As part of these changes, Companies House is streamlining the accounts filing options available to small and micro companies as part of this reform package.

3. Why profit and loss requirements are changing

While public disclosure of the information is a requirement for all companies, following a consultation phase, the research identified that the minimal disclosures that small companies are allowed to make do not give a level of transparency sufficient to get limited liability protection. Subsequently, it was felt that this minimal level of disclosure has the potential to appeal to fraudsters wishing to present a false image of the company.

4. How will the changes affect small and micro companies?

Below is an overview of the changes coming into effect:

  • Fewer options

“To simplify our framework, we’ll be reducing our account filing options to just two: micro-entities and small companies. Under the new measures, the option for abridged accounts will be removed. Having fewer filing options will help to avoid confusion and reduce costly mistakes.”

  • More information

“Under this new framework, all small companies, including micro-entities, will be required to file their profit and loss accounts.”

“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. We’ll keep you updated on its development and on timescales.”

4.1 Other changes to filing accounts will include:

  • a requirement for accounts to be filed digitally and fully tagged using iXBRL.
  • the removal of a paper filing option for most companies.
  • the requirement for a company relying on an audit exemption to provide an additional statement by the directors on the balance sheet, confirming the exemption being relied upon, and that the company meets the qualifying criteria.
  • giving the Registrar power to require all component parts of a filing to be delivered together to facilitate the digital filing of more complex accounts.
  • limiting the number of times a company can shorten its Annual Reporting Period.

For full information on this announcement and these changes you can view details here: Changes to accounts, part 2: small company filing options – Companies House (blog.gov.uk)

5. Protecting your firm with outsourced compliance solutions

Even if your firm’s COLP, COFA, MLCO or MLRO have the support of in-house compliance teams, the obvious advantage to looking externally from your firm to assist with your regulatory and compliance needs is that you obtain the benefit of the wider experience of your chosen partner.

At The Strategic Partner, we work with law firms of all sizes and structures across England and Wales. Consequently, we have built a tremendous amount of practical experience in all facets of law firm management and regulation that you can access and benefit from. We will work in tandem with you as part of your team, ensuring your firm has a robust regulation and compliance strategy that brings you peace of mind enabling you to focus on other areas of your firm that are key and important.

Our knowledge and experience are accessible to all of our members and those who acquire our compliance and regulation services. We also have access to leading accounting and compliance industry experts, and we can assist you in any situation.

Our solutions are cost-effective and provide firms with the necessary solutions to comply with the:

  • Codes of Conduct.
  • SRA Accounts Rules.
  • Regulations including AML.
  • Other legalisation that affects law firms.

These are comprehensive packages set at affordable prices for all firms.

You can view our compliance services by clicking on the links below:

For more information about our Risk, Regulation & Compliance Services, you can call us on 0203 911 9710 or you can email us at info@thestrategicpartner.co.uk.

 

View and download the PDF version of this article here. 

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