This comes as part of wider Companies House reform, as laid out in the Economic Crime and Corporate Transparency bill.
Going forward, software-only filing will become mandatory and small businesses (including micro entities) will be required to file their profit and loss accounts.
What are the new filing requirements for company accounts?
The new company filing requirements can be separated into two parts:
- Companies will need to use software to file their accounts
- Small companies (including micro entities) will now need to file profit and loss accounts
Many companies already use software to file their accounts, but going forward, this will be essential. Companies will no longer be able to use paper filing, or file online using the free CATO (Company Accounts and Tax Online) or Companies House’s WebFiling service. This includes larger, complex companies that can currently only use paper filing.
In the past, small companies including micro entities weren’t required to file their profit and loss accounts. But this is changing. Now, they’ll need to file their profit and loss accounts with Companies House. Abridged accounts will no longer be accepted, in an effort by Companies House to streamline filing options and standardise company accounts records.
There are additional accounts-related changes that could affect your company. Check out the Companies House guidance on changes to UK company filing requirements.
Why is Companies House making these changes?
In recent times, Companies House has experienced a spike in fraudulent activity. Software filing, and profit and loss filing for small businesses will help Companies House achieve greater transparency and improve the quality of information on the register. In this way, it can lower the rate of economic crime and fraud.
As things stand, smaller companies aren’t required to file profit and loss accounts, or the directors’ report. But limited disclosure of information leaves the system open to fraudsters, who can present a false image of a company. And, by disclosing accounts publically small businesses give creditors and consumers more information to make better-informed decisions.
When are the changes for company accounts coming into effect?
The timeline for changes to filing requirements is yet to be confirmed. You can sign up for email updates from Companies House on Companies House reform.
Rest assured, Companies House will provide plenty of time to make the changes in your business before the requirements become mandatory.
Who will these changes affect?
Many company types already have the option of filing their accounts using software. These include:
- Micro entity
- Full, unaudited
- Community Interest Companies (CIC)
In time, all company types will need to use software to file their annual accounts. Companies House is working on solutions for business types that cannot currently file accounts using software.
What happens if you don’t comply with these changes?
Software-only filing will soon be mandatory for all companies. The same goes for filing profit and loss accounts for small businesses.
It won’t be possible to submit your annual accounts to Companies House without software. While penalties are yet to be confirmed for the changes, it’s likely companies will continue to incur the existing late filing penalties.
How to comply with the new filing requirements for company accounts
Going forward, registered companies will need to file their annual accounts using software. Fortunately, this software already exists for many business types.
Xero Tax accounting software makes complying with the new requirements a breeze. Submit annual accounts to Companies House, directly from the platform.