3rd March 2023
Since 22 September 2022 the Economic Crime and Corporate Transparency Bill is making steady process through Parliament. The bill contains proposals to reform Companies House, involving changing the filing requirements for small companies including micro-entities. The changes set out in the bill are to improve transparency by making more financial information available to the public, as well as help tackle economic crime and provide more information for enforcement agencies.
A company is classified as a “small company” if it meets two out of the three criteria for two consecutive years:
- Turnover of £10.2 million or less
- An average of 50 employees or fewer
- Balance sheet with total assets of £5.1 million or less
A company is classified as a “micro-entity” if it meets an two out of the three criteria for two consecutive years:
- Turnover of £632,000 or less
- An average of 10 employees of fewer
- Balance sheet with total assets of £316,000 or less
Currently under the Companies Act 2006, small companies are only obliged to deliver “abridged” accounts detailing a copy of the balance sheet. The small companies are not required to file a copy of it’s profit and loss account and/or the directors report. The Home Office believe that the minimal level of disclosure has the potential to appeal to fraudsters wishing to present a false image of the company (£5.9 million per annum to be precise!).
Under the new framework, small companies and micro-entities will be required to file their profit and loss accounts. The government believe having this key information available on the public register will help creditors and consumers make better-informed decisions and improve the value of information on the public register for users.