Companies House filing reforms should not burden business
12 February 2021: ICAEW members across practice and business look set to be affected by reforms to the filing regime operated by Companies House, after the government published proposals that include a shortening of filing deadlines and other changes to the nature and format of the information companies are obliged to provide.
A consultation launched by BEIS in December puts forward a reduction of filing deadlines to three months for public companies and six months for private companies, and a requirement for company directors to declare the company’s eligibility to file under whichever regime it has chosen. It also suggests the introduction of mandatory digital filing, with tagging to make information filed with Companies House machine-readable.
In its consultation, BEIS also wants to review the filing regimes available to companies at the smaller end of the scale with a view to reducing the options available to them. It is also seeking feedback on the idea that companies should be required to file the most detailed set of accounts they prepare.
The objective of the reforms is to improve the quality and value of the financial information on the Companies House register. Since access to company data was opened up online, Companies House states it has seen “high levels of use” of its services and believes more timely, higher quality company data could add significant value to the UK economy. The reforms also have an underlying motivation to tackle fraud, tax evasion and other forms of economic crime. At the same time, the proposals signal a step towards a “file once” ambition that would allow filed information to be appropriately shared between HMRC, Companies House and other government agencies.
As part of a separate consultation on Making Tax Digital for corporation tax (MTD for CT), HMRC is also currently consulting on the alignment of the CT return with Companies House filing deadlines. If both the HMRC and the BEIS proposals are introduced, this would significantly reduce the time available to prepare and file CT returns from 12 months after the accounting year end, to three and six months for public and private companies respectively. As tax adjustments are largely determined after accounts have been finalised, many companies may find it challenging to adjust to this timetable.
Sally Baker, Technical Manager in ICAEW’s Financial Reporting Faculty, said ICAEW is keen to ensure any changes to the filing regime do not result in unnecessary burdens on business.
“We strongly support efforts to tackle economic crime. At the same time, businesses need to be able to focus on operating rather than being overly burdened by filing requirements, especially in the current challenging economic environment. The cost of economic crime to society as a whole is significant, but it is an activity committed by the minority. The vast majority of companies are, and want to be, compliant. It is important, therefore, that any measures introduced are proportionate to the problems being tackled and that the benefits outweigh the costs,” Baker said.
ICAEW will submit its response to the consultations at the end of February and will continue to engage with BEIS on the issues in the coming months. “We are keen for further feedback from members on how the proposed reforms would likely affect them”, added Baker. “In particular, we welcome real-life examples of filing issues they have experienced and views on the practical impact of the proposals”.
Similarly, ICAEW would value further member views on how the different filing regimes and options currently available to small and micro businesses could be simplified and made more effective, and thoughts on how greater compliance can be achieved.
“Our dialogue with BEIS is ongoing so any feedback members have, by the end of February or beyond, would be welcome,” Sally Baker said. Members can submit feedback on the proposed Companies House reforms by emailing email@example.com.
Meanwhile, the Tax Faculty is collating member views for ICAEW's response to the MTD for CT, please email firstname.lastname@example.org with your comments.
ICAEW Insights will be speaking with Companies House CEO Louise Smyth to find out more about the proposals and the reasoning behind them. To read this interview and stay up to date with other other accountancy news and guidance, subscribe to ICAEW’s Daily email via your preference centre.
Further information on each of the consultations can be accessed using the links below: