Change to accounts filing requirements

We would like to make you aware of the new Economic Crime and Corporate Transparency Act, a recent legislative endeavour aimed at improving the information held on the UK companies register.

The Act gives Companies House with authority to combat economic transgressions and endeavours to refine the accuracy and transparency of information on the UK’s company register. However, while the Act is now law, the finer details are pending completion. Here are the main headlines:

Adjustments to the preparation and submission of accounts seek to elevate the quality of financial data on the register. Small companies will no longer enjoy the option of submitting abridged accounts; instead, they must provide both their profit and loss account and directors’ report. Similarly, micro-entities must file their profit and loss accounts, although they retain the discretion to omit the directors’ report. However, these may not necessarily be made available for public inspection. The provision that might be applied in practice is still being considered.

The Act mandates explicit disclosure regarding audit exemptions, necessitating companies to articulate their exemption status and eligibility on the balance sheet.

In facilitating digital transition, the Act delegates authority to the Registrar to mandate electronic document delivery, paving the way for swifter adoption of electronic filing over the next few years.

Beyond accounting, the Act empowers Companies House to intensify efforts against economic crime. Measures include mandatory identity verification checks for directors, enhanced scrutiny of company names, and bolstered investigative and enforcement capabilities.

Concluding the Act’s provisions is the introduction of the “Failure to Prevent Fraud” offense, holding larger companies accountable for fraudulent acts committed by employees in the absence of reasonable fraud prevention protocols.

In essence, the Economic Crime and Corporate Transparency Act represents a concerted effort to fortify measures against economic misconduct and uphold the integrity of the company register.