From April 2027, all company accounts will have to be filed using commercial software, including dormant accounts.
Web and paper accounts filing will no longer be possible. This change will not apply to other statutory filings.
The change is due to the Economic Crime and Corporate Transparency Act that aims to improve transparency by making more financial information publicly available. The government hopes to make filings more efficient and secure, whilst improving the quality of data on the register, which has received criticism for scandals involving shell companies, fraud, and money laundering.
Consequently, companies will need to find suitable software to comply with these changes. Whether you are a director who files the accounts yourself or use a third party, such as an accountant to file, this will be worth considering. Software packages are already available, so you might want to get ahead of the game, although the deadline seems a long way off.
Other changes
Small company
A company is ‘small’ if, in a year, it meets two of the following criteria:
- Turnover of £10.2 million or less
- £5.1 million or less gross assets on its balance sheet
- 50 employees or fewer
Or, for the financial year starting on or after 6 April 2025, two of:
- Turnover of £15 million or less
- £7.5 million or less gross assets on its balance sheet
- 50 employees or fewer
Micro entity
A company is a ‘micro-entity’ if, in a year, it meets two of the following criteria:
- Turnover of £632,000 or less
- £316,000 or less gross assets on its balance sheet
- 10 employees or fewer
Or, for the financial year starting on or after 6 April 2025, two of:
- Turnover of £1 million or less
- £500,000 or less gross assets on its balance sheet
- 50 employees or fewer
For filings from 1 April 2027:
- Micro-entity companies will need to file a copy of their balance sheet and profit and loss account
- Small companies will need to file a copy of their balance sheet, profit and loss account, directors’ report, and auditor’s report (unless exempt*)
* Companies claiming audit exemption must provide an enhanced statements from their directors on the balance sheet. They must specify which exemption is being claimed and confirm their company qualifies.
Preparing and filing ‘abridged’ or ‘filleted’ accounts will no longer be possible. These options were once available to reduce administrative pressure and protect the commercial confidentiality of smaller companies. Therefore, there has been some concern amongst business owners at the change.
Note: Initial profit transparency is going to be a concern for many businesses, as naturally you may not wish your customers, suppliers, or staff to see how much (or little) profit the business is generating. Critics believe that small companies will be adversely affected. However, as this change will affect all entities at the same time, the impact of the change may be reduced.
Further down the line, another change may be limiting the number of times a company can shorten its Accounting Reference Period, where valid business reasons will be necessary should a company wish to do so more than once in five years.
Commentators have suggested that these changes may deter entrepreneurs from incorporating at a time where the UK most requires growth.
Need some guidance?
If you are unsure about how these changes might affect your company and would like some assistance, please contact us…
