Government U-Turn on P&L Disclosure

From 1 April 2027, major changes to UK company filing requirements were originally announced as part of the Economic Crime and Corporate Transparency Act (ECCTA). These reforms aimed to improve transparency and reduce economic crime.

However, on 3 July 2024, the government announced a U-turn on the most controversial measure: requiring small and micro-entity companies to file a profit and loss account at Companies House.

What Was Originally Planned?

• Software Only Filing

All companies would be required to file their accounts using commercial accounting software. Paper and Companies House web filing would no longer be accepted.

• • Full Profit and Loss Disclosure

• • • Micro entities would have needed to file both a balance sheet and a profit and loss account.
    • Small companies would have needed to file a directors’ report, in addition to a profit and loss account.
    • Abridged accounts would no longer be permitted.

• • New Disclosure on Audit Exemption

Companies claiming audit exemption would be required to include a statement on the balance sheet confirming that the exemption conditions were met and specify which exemption was claimed.

• Restrictions on Shortening Accounting Periods

Companies would not be able to shorten their accounting reference period more than once every five years without a valid business reason, aligning with the rules on extending accounting reference periods.

What Has Changed?

Following strong feedback from businesses and professional bodies, the government announced on 3 July 2024 that it would no longer require small and micro companies to file their profit and loss account at Companies House.

This means small private companies can continue to keep their revenue, gross margin, and profit figures private from customers, suppliers, competitors, and the general public.

What Changes Are Still Expected?

• Software only filing is still planned to come into force.
• New audit exemption disclosures remain in place and are expected to proceed.
• Restrictions on shortening accounting periods are still set to go ahead.

Final Thoughts

Whilst the reversal on P&L account filing will come as a relief to many small businesses concerned about privacy, other changes will still impact how companies prepare and submit their accounts.

Get In Touch

If you would like to discuss how these changes may affect your business, please contact your local Whitings office or your usual Whitings contact.

Disclaimer - All information in this post was correct at time of writing.