Changes to Company Accounts 
There are significant changes proposed under the Economic Crime & Corporate Transparency Act 2023 (ECCTA) for how companies report their financial information and what financial information they must publicly report. This will particularly affect small and micro entities and the filing of their accounts, as these companies have, to date, been able to file public accounts with minimal information. The changes are designed to address the insufficient (and sometimes inaccurate) financial information currently on the companies register.
What is changing?
- All small companies must file complete accounts including a balance sheet, profit and loss account and a directors’ report.
- Micro-entities must file a balance sheet and a profit and loss account (a directors’ report is optional).
- Abridged and filleted accounts will be abolished.
- An eligibility statement will be required by companies claiming an audit exemption. This may particularly affect dormant companies. This aims to provide the Registrar with additional evidence to take stronger enforcement action for false audit exemption filings in the future.
The definitions of small and micro entities have not changed; therefore, a company is small if, in a year, it satisfies any 2 of the following criteria:
- a turnover of £10.2 or less
- £5.1 million or less on its balance sheet
- 50 employees or fewer.
A company is a micro-entity if, in a year, it satisfies any 2 of the following criteria:
- a turnover of £632,000 or less
- £316,000 or less on its balance sheet
- 10 employees or fewer.
Companies will need to consider how their published accounts will meet the new requirements, particularly if they have been abridged or filleted to date. In addition, companies may also need to consider what any increased public financial transparency may mean for their customers, suppliers, lenders, investors, and employees who may have greater visibility of company accounts going forward. The ECCTA includes provisions which allow the Registrar to make the profit and loss accounts of small or micro-entities unavailable for public inspection and this may provide some relief for those concerned about trading information becoming publicly available.
Whilst changes to company accounts will not be among the first measures to be in force under the ECCTA, companies would be advised to start planning for these changes and make sure that they have all necessary information and systems in place to comply with the new regime.
As of October 2024, the Government has still not given an estimated implementation date but has stated that following the accounts reforms, Companies House should be able to:
- mandate software only filing for all accounts - package accounts will be able to use the new zip package functionality;
- remove the option for small companies and micro-businesses to file abridged accounts ;
- require all companies to file profit and loss accounts, helping to improve the financial information on the register - and require small companies to also file their directors' report;
- require a company claiming an audit exemption to provide an enhanced statement from their directors on the balance sheet, specifying the exemption being claimed and confirming the company is eligible for it; and
- limit the number of times that a company can shorten its accounting reference period.