Companies House
Listened

UPDATE ON THE CHANGES TO ACCOUNTS FILING

Last year we highlighted concerns around the proposed Companies House reforms under the Economic Crime and Corporate Transparency Act. While the requirement for software filing was largely expected given most businesses already use software directly or through an accountant, the more controversial proposal was the requirement for small companies and micro-entities to file profit and loss accounts on the public register.

The concern for many SME owners was not transparency itself. It was the possibility of commercial disadvantage arising from the publication of information that could be misunderstood, misused or taken out of context. For many micro-businesses there was also a privacy concern, as the publication of a profit and loss account can provide a clear indication of the owner's income.

Following consultation and engagement with stakeholders, the government has now confirmed that small companies and micro-entities will be able to opt out of publishing their profit and loss accounts on the public register when the reforms take effect from April 2028. The detail of how this opt-out will work has yet to be published, but it represents a significant change from the original proposal and addresses one of the biggest concerns raised by smaller businesses.

The wider reforms remain. Companies will still be required to file accounts using software and Companies House continues its broader programme of improving transparency and tackling economic crime. For most SMEs, however, the key takeaway is that there is now additional time to prepare and a pathway to maintaining some degree of commercial privacy. It is an interesting outcome.

One interpretation is that the government listened to legitimate concerns and adapted the reforms accordingly. A more cynical observer might ask why an opt-out mechanism is required at all. If most small businesses are expected to choose privacy, why not make non-publication the default position? The answer may simply be administrative flexibility. Equally, it may be an amendment that returns in future.

For now, the direction of travel is clear. Greater transparency remains the objective, but the practical realities facing small businesses appear to have been recognised. Sometimes consultation changes the outcome.