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Changes to accounts preparation and filing requirements

Author: Sally Baker

Published: 05 Jan 2024

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pile stack of paper flying off blue sky changes to account preparation

As well as measures to tackle economic crime, the Economic Crime and Corporate Transparency Act aims to support economic growth by improving information held on the UK companies register. Sally Baker explains the changes the Act will bring in the coming years.

Following a lengthy parliamentary process, the Economic Crime and Corporate Transparency Act (ECCTA or the Act) received Royal Assent on 26 October 2023. The Act gives Companies House more powers to tackle economic crime and aims to improve the transparency and accuracy of information on the UK’s company register to support economic growth. This article focuses on explaining the changes to accounts and filing requirements, but also outlines some of the other measures that will be introduced over the next few years.


The Act is the culmination of several years of activity, which began with a government consultation in May 2019 on corporate transparency and register reform. Further consultations followed, with the government publishing a White Paper in February 2022 setting out its final position on reforms ahead of introducing legislation. That same month, Russia’s invasion of Ukraine led to aspects of legislation being fast-tracked through Parliament, in the form of the Economic Crime (Transparency and Enforcement) Act 2022. This was too soon to incorporate many of the measures set out in the White Paper, and hence the process of a second piece of legislation began. The Economic Crime and Corporate Transparency Bill (the Bill) was laid before Parliament in September 2022. A sometimes challenging process of debate and amendment followed before the Bill received Royal Assent in October 2023, becoming the Act and thereby becoming law.

Effective date

The immediate question on everyone’s lips is when are the measures in the Act coming into force? Implementation will involve a significant programme of work, phased in over several years. Despite having come into force as law, many of the measures within the Act will require secondary legislation (in the form of Regulations) to become effective. The timing of any secondary legislation is yet to be determined as it relies on parliamentary time being available, but is anticipated to start arriving from early 2024. Early measures are likely to include some of the changes outside of accounts reform outlined later in this article.

The immediate question on everyone’s lips is when are the measures in the Act coming into force?

Changes to accounts

The changes to the preparation and filing of accounts are designed to improve the quality and value of financial information on the register. In addition, they aim to make Companies House better able to serve the needs of a 21st-century economy as well as preventing abuse of the corporate framework.

Simplifying filing obligations

The Act simplifies and streamlines the filing options for small companies, which will no longer have the option to prepare and file abridged accounts. Small companies will be required to file both their profit and loss account and directors’ report, thereby also removing the option of filing so-called ‘filleted’ accounts. Micro-entities will similarly be required to file their profit and loss account but will continue to have the option not to prepare or file a directors’ report.

Provision that profit and loss accounts may not be publicly available 

In a significant change to the original Bill, the Act includes a regulatory power that, while small and micro companies will be required to file their profit and loss account, it (or parts of it) may not necessarily be made available for public inspection. Exercise of this power will be subject to Regulations being passed by Parliament. 

The Act includes a regulatory power provision that, while small and micro companies are required to file their profit and loss account, it (or parts of it) may not necessarily be made available for public inspection

During consultation phases, some legitimate concerns were raised that requiring small companies to file their profit and loss account at Companies House may lead to commercially sensitive and personal financial information becoming publicly available. ICAEW expressed the view that publishing a profit and loss account would be prejudicial to the interests of such companies and their members. While recognising that filing information – and making it publicly available – is a fundamental principle of companies being afforded limited liability, the ability of the company to carry on its trade effectively must also be respected. 

On the other hand, however, Companies House requires information in the profit and loss account to verify that companies are entitled to file accounts under the regime which they are doing so. Delivery of this information is key if the underlying purpose of the Act – to make information on the register more transparent, reliable and accurate – is to be achieved. 

Balancing these various perspectives was a debate that continued as the Bill passed through Parliament and resulted in an amendment being made to include the power outlined above. How, or in what circumstances, the provision might be applied in practice, however, is still being considered.

Audit exemption statement

When claiming exemption from audit, directors are currently required to include a statement to that effect on the balance sheet. The Act extends this requirement, additionally requiring the statement to identify the exemption being taken and include confirmation that the company is eligible to take the exemption. 

This statement applies to all companies claiming exemption from audit, including dormant companies.

Electronic delivery

While the Companies Act currently provides for the Registrar to specify ‘the form, authentication and manner of delivery of documents’, it is the government that may, through secondary legislation, require documents to be delivered by electronic means. Under the Act, authority has now been transferred to the Registrar and such requirements must be introduced through the registrar’s rules. Aligned with Companies House’s strategic goal of being a fully digital organisation by 2025, this lays the foundation for software-only filing and the removal of all other filing routes (paper and web-filing). The transition to software-only filing is expected to be phased in over the next two to three years.

Company law changes beyond accounts

The Act brings in many other changes, giving Companies House the power to play a greater role in tackling economic crime, alongside measures to improve the transparency and accuracy of information on the register.

These measures include:

  • identity verification checks being introduced for all new and existing registered company directors, people with significant control, and those who file on behalf of companies;
  • Companies House having greater powers to query information, carry out stronger checks on company names, new rules for registered office addresses and changes to confirmation statements; 
  • more effective investigation and enforcement powers, including the ability to share relevant information with law enforcement agencies and other government departments; and
  • the ability for individuals to apply to suppress personal information from historical documents and public view to protect individuals from fraud and other harms.

Greater powers to query information and more effective investigation and enforcement powers are likely to be some of the first measures to be implemented.

Companies House fees

Companies House fees are set so that they cover the costs of services it delivers. Evidence indicates that Companies House fees are also lower than the global average and, some would argue, contribute to the level of corporate fraud taking place. Funding the reforms and operational changes introduced by the Act will, not surprisingly, necessitate an increase in Companies House fees from 2024. Again, however, the timetable for any changes remains unknown at this stage.

Failure to prevent fraud

Finally, but not insignificantly, the Act creates a new Failure to Prevent Fraud offence, aimed at holding companies to account if they profit from fraud committed by their employees. Under the new offence, large companies will be liable where a specified fraud offence is committed by an employee or agent and it did not have reasonable fraud prevention procedures in place. It does not need to be demonstrated that the company’s management were either involved in, or knew about, the fraud. The government has committed to publishing guidance that will provide entities with more information about what will constitute ‘reasonable fraud prevention procedures’ being in place before the new offence comes into effect. More information regarding this aspect of the Act and related resources can be found on ICAEW’s Economic Crime hub.

Stay informed

The Corporate Reporting Faculty will be monitoring developments closely and will keep faculty members informed through its monthly bulletin and other channels. The government also has a Changes to UK company law hub highlighting the changes introduced by the Act.

Sally Baker, Head of Corporate Reporting Strategy, ICAEW

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