It has been a long established principal that SME companies can avoid publishing all of their financials at Companies House, by filing abbreviated, filleted or abridged accounts instead of full accounts. This enables them to keep details about business turnover, gross margin, profitability and dividends confidential.
However, the Government have just announced plans to require all companies to file Profit & Loss Accounts and Directors Reports at Companies House.
The Department for Business & Trade have not yet set a timetable for this change, but they plan to introduce it, to:
- Reduce the risk of deliberate misuse of minimal disclosure options to hide money laundering and other fraudulent activities,
- Crack down on abuse of dormant and audit exemption rules.
The government plans to make further changes to reporting rules in a future amendment to the Act, including:
- mandating digital filing,
- full tagging of financial information in iXBRL format, and
- a reduction of the number of times a company can shorten its Accounting Reference Period.
As this legislation has been debated for over a year, and received Royal Assent on 26 October, there seems little likelihood of it now being watered down. This is all a bit odd though, as the Government have gone on record previously as wanting to reduce business red tape and deliver the promised ‘post Brexit dividend’, but this use of Parliamentary time has now been used for other purposes.
Disclaimer - All information in this post was correct at time of writing.