Small companies and micro-entities will have to file their profit and loss account at Companies House when the Economic Crime and Corporate Transparency Bill, currently going through Parliament, becomes law. The aim of the change is to improve transparency by making more financial information available to the public.
At present small companies have to file a balance sheet each year but adding a profit and loss account and directors’ report is optional. Most choose not to do so. Putting key information on the public record, including turnover and profit or loss, is intended to help creditors and consumers to make better-informed decisions.
The Bill will also give Companies House greater powers to check, remove or decline information filed. Currently all submissions are accepted without questioning their reliability. Other measures aimed at ensuring accuracy include:
- Anyone setting up, running, owning or controlling a UK company will have to verify their identity with Companies House.
- For existing companies, all directors and people with significant control will have to verify their identity within a set period.
- Anyone acting on behalf of companies will also need to verify their identity before they can file information.
- Companies House will be able to challenge suspicious information and inform security agencies of potential wrongdoing.
The legislation will also help company directors to better protect personal information published by Companies House that may put them at risk of fraud or other harm. In addition, filing processes for small businesses will be digitised. All accounts will have to be filed fully tagged using iXBRL. This is an open standard that enables a single document to provide both human-readable and structured, machine-readable data. Most companies will not be able to file on paper and the number of times a company can shorten its annual reporting period will be limited.