Companies House performs two key roles. It facilitates the creation of limited companies and provides information about those entities which is freely accessible online by the public . UK companies are required to register certain financial information, including a copy of their accounts.
The Government, through its Department of Business, Energy and Industrial Strategy (BEIS), has been seeking to improve the quality and value of financial information on the UK companies register as well as reforming the powers and role of Companies House. The programme of reform aims to make Companies House fit for the future and better able to serve the needs of a 21st century economy, as well as to prevent abuse of the framework and instances of economic crime.
Areas of reform
The White Paper provides more detail on high-level reforms that had been announced following an initial consultation on Corporate Transparency and Register Reform in 2019. It also includes the Government’s response to three consultations issued in 2020 which looked at:
- The powers of the Registrar;
- Implementing the ban on corporate directors; and
- Improving the quality and value of financial information on the UK companies register.
The White Paper sets out 58 reforms that the Government will be introducing legislation for, categorised into nine areas:
- Registrar’s powers
- Company names
- Identity verification
- Corporate directors
- Third party agents
- Data sharing
- Transparency of ownership
- Financial information
Measures relating to financial information are outlined below. Information regarding the reforms in other areas can be found here
The reforms relating to financial information and filing requirements contained in the White Paper and which the Government intends to legislate for are:
- Amending the Companies Act to clarify the requirement for a company to prepare and deliver one set of accounts.
- Limiting the number of times a company can shorten its accounting reference period (ARP) to align with the restrictions around extending its ARP.
- Small companies will no longer have the option to prepare and file abridged accounts and will be required to file both their profit and loss account and directors’ report ie, the option to file "filleted" accounts will be removed.
- Micro-entities will also be required to file their profit and loss account but will continue to have the option to not prepare or file a directors’ report.
- Company accounts will be required to be filed in a digital format using iXBRL (Inline Extensible Business Reporting Language) and also to be fully tagged.
- Dormant companies will be required to file an eligibility statement. The changes to the filing requirements for small companies outlined above will enable their eligibility to be checked.
- Up-front validation of accounts will be increased. New querying powers granted to the Registrar will enable more investigations to be carried out when cases are bought to her attention.
- Options to enable companies to file financial information once a year with Government will be explored although there are no firm plans in this regard at this time.
- Time periods allowed for filing accounts will not be reduced at this time. However, legislation will be introduced to facilitate future changes.
The Government now intends to introduce legislation to action the reforms detailed in the White Paper. ICAEW will continue to monitor developments and will update this page as more information becomes available.
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