Under new rules in the Economic Crime and Corporate Transparency Act 2023, small companies will have to file a profit and loss account as well as a directors’ report and prepare annual accounts in accordance with section 396 CA 2006. These changes will ensure that key information such as turnover is available at Companies House.
A company is defined as small if it meets two of the following criteria:
• turnover of less than £10.2m,
• £5.1m or less on its balance sheet
• 50 employees or fewer.
Micro-entities will also be required to prepare annual accounts in accordance with the requirements of section 396 CA 2006 including the preparation of a profit and loss account however they will not have to produce a directors’ report. There will no longer be an option for micro companies to prepare abridged accounts. Micro-entities are those meeting two of the following criteria:
• a turnover of £632,000 or less
• £316,000 or less on its balance sheet
• 10 employees or less
Those using the audit exemption rules, including dormant companies, will have to file an exemption statement.
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.
The timetable for implementation has yet to be announced. If you have any queries about how these changes will affect your business, please get in touch with Stephen McConnell, Business Services Partner T: 028 9032 3466 E: stephenmcconnell@bakertillymm.co.uk
Changes to Reporting Requirements for Small Companies
