Briefing Note: UK Company Accounts are changing… It’s time to start getting ready!
What are the changes?
Changes included in the draft ECCT:
- Small companies[i] will be required to file a profit and loss account and a directors’ report
- Micro-entities[ii] will be required to file a profit and loss account
- There will no longer be any option to file abridged accounts
- Companies claiming an audit exemption (e.g., dormancy) will need to prove eligibility by completing a new eligibility statement
- Companies will be required to deliver accounts together in cases where more than one document is required (e.g., for consolidated groups)
Companies House has also suggested that it will bring in the following by via secondary legislation:
- A requirement for software only filing for all company accounts
- A requirement for the tagging of financial information in iXBRL format irrespective of company size
- A reduction the number of times a company can shorten its Accounting Reference date
[i] A company is ‘small’ if, in a year, it satisfies any two of the following criteria:
- a turnover of £10.2 million or less
- £5.1 million or less on its balance sheet
- 50 employees or fewer
[ii] A company is a ‘micro-entity’ if, in a year, it satisfies any two of the following criteria:
- a turnover of £632,000 or less
- £316,000 or less on its balance sheet
- 10 employees or fewer
What does that mean for me?
Although there will be a grace period before some of these measures come into effect, the changes will have an impact on anyone responsible for filing company accounts for a UK business, regardless of size. We have suggested a number of items below that you should start to consider now.
- How will this impact the timetable for statutory audits and my accounts production timetables?
- Will I need to bring forward the submission of subsidiary accounts included within consolidated groups?
- Do I have a software partner for electronic filing of accounts?
- Will I be able to use the same partner for my existing filings with HMRC?
- Do I have a provider for iXBRL tagging?
- What additional data will third-parties, such as financial analysts, now be able to access directly from Companies House?
- Should I change my subsidiary footprint in advance of the changes in order to counter the potential implementation costs and the anticipated increases to the filing fees themselves?
How can LawDeb Corporate Secretarial Services help?
LawDeb Corporate Secretarial Services is working closely with our clients to help them prepare for these changes in an efficient and pragmatic way. We can act as advisers, help you to select appropriate software partners, or co-ordinate a one-off project. Look out for further posts on how we can help you with the other changes that will come out of the ECCT.
To find out more contact Chelsea Chivers, Head of UK Entity Management Services, Iain Hamilton, Associate Director, or Sharon Mckinney, Business Development Director.
[1] A company is ‘small’ if, in a year, it satisfies any two of the following criteria:
- a turnover of £10.2 million or less
- £5.1 million or less on its balance sheet
- 50 employees or fewer
[1] A company is a ‘micro-entity’ if, in a year, it satisfies any two of the following criteria:
- a turnover of £632,000 or less
- £316,000 or less on its balance sheet
- 10 employees or fewer
At LawDeb we are focused on delivering peace of mind for all of our clients, which means we are proactive when it comes to supporting them with the individual impacts of changing regulation.
Chelsea Chivers - Head of UK Entity Management, LawDeb
