The Department for Business, Energy & Industrial Strategy (BEIS) has published a whitepaper detailing its response to consultations on Companies House reform.
Companies House operates the UK’s corporate registration service; a service that enables companies to establish themselves as a legal entity and to publish relevant information for the benefit of the public and anybody with a vested interest in the business.
The standing framework, that sits behind the service, is relatively easy to navigate and extremely flexible – designed as such to promote entrepreneurship in the UK, and to make it accessible.
However, to ensure that the service continues to encourage enterprising individuals, whilst improving transparency and bearing down on those abusing the system with criminal intent, the Government is proposing a number of changes to be made.
It is not known when these changes will come into effect, but with the passing of the Economic Crime Bill, it may not be that far off.
In essence, the whitepaper suggests that the Government will focus on two key areas – reporting and filing, and the ‘role’ of Companies House itself in relation to the data it holds.
Reporting and filing requirements
Plans to reform reporting and filing requirements, at Companies House, include limiting the filing options to ‘micro-entities’ and ‘small companies’ and doing away with the option to file abridged or filleted accounts.
This, it is hoped, will improve accuracy and transparency of the information on the register and ensure all businesses are publishing a ‘true and fair view’ of their company’s financial position.
Small companies will be required to file a profit and loss account, a balance statement and a directors report; essentially, filing what they prepare, rather than thinning out information prior to submission.
However, it is worth noting that companies meeting the micro-entity threshold will still retain the option not to prepare or file a directors report.
Accounts filed with Companies House will mirror those submitted to other Government departments.
As a result, there is scope for the Government to consider a more centralised and efficient approach to filing, whereby a company need only file their accounts once, to one place, and those departments requiring visibility can access and extract data as necessary.
Filing periods will remain unchanged, for the time being, but an examination of these further down the line should not be ruled out. Currently, companies have until nine months following the end of the reporting year to file their accounts with Companies House.
The plans outlined in the whitepaper also put forward a requirement to use full iXBRL tagging for accounts being filed, in line with the Government’s digital agenda. In the event of non-compliance with this, accounts will be rejected.
The role of Companies House
As part of the reforms, Companies House will be given powers that will enable them to take on a more active role in ensuring the trustworthiness of the data it holds, and in preventing fraudulent use of its services.
Where Companies House has suspicions about filings or appointments, they will be able to request further evidence from directors for cross-referencing and analysis, and to share pertinent information, more easily, with other Government bodies or law enforcement.
Those involved with the creation, management and control of entities at Companies House will also be subject to more stringent, but simple, anti-money laundering and identity verification checks.
How can George Hay help?
Our experts in Hertfordshire, Bedfordshire and Cambridgeshire, can assist you with the preparation of your annual accounts to ensure you comply with the relevant accounting regulations and to give you accurate financial information to use in your business.
As part of our partner-led service, we are here to support you throughout the year, not just once a year when your accounts are produced, and we will be keeping abreast of all further developments in respect of these plans.
To discuss your requirements with us, contact us on 01462 708810 or fill in our online enquiry form.