Companies House to axe filleted and abridged accounts
Each year, many SMEs submit filleted or abridged accounts to Companies House. If you submit abridged accounts, you don’t have to disclose your net profit or a detailed breakdown of creditors, debtors or fixed assets. With filleted accounts, you don’t have to submit your profit and loss account or a directors’ report.
However, these options will soon become unavailable. There are two main reasons for the change. First, Companies House intends to become a completely digital organisation. Second, concerns about money laundering have come into sharp focus in the wake of the war in Ukraine. As a result, government now wants to accelerate proposed changes to the way Companies House operates.
How annual accounts submissions will change
When the changes become law, companies will have to use iXBRL to file digitally tagged accounts. This will make it much easier to compare accounts with information held by HMRC, theoretically making it simpler to spot irregular activity.
Companies House will also have significant new powers. If you file accounts, you’ll need to have a verified identity. The organisation will be able to share data with a range of authorities. If company directors or secretaries don’t comply with their responsibilities – or make sure their information is correct – they will face fines.
Filleted and abridged accounts
While submitting your annual accounts will become simpler, Companies House will no longer offer options for submitting either filleted or abridged accounts. This means all companies, regardless of size, will have to submit a profit and loss account, along with a balance sheet. However, micro-entities will not have to submit a directors’ report. A micro-entity is currently defined as a business with two of the following:
- a turnover under £632,000
- £316,000 or less on its balance sheet
- 10 employees or fewer.
What the changes mean for your business
Unfortunately, the changes mean smaller businesses will suffer a loss of privacy. Their detailed accounts will be publicly available, including to competitors. Potentially more positive, credit rating agencies will have access to more detailed financial information about your company. This could make it easier to secure credit.
Also on the plus side, because directors will have to have a verified identity with Companies House, identity theft will become much more difficult.
When will filleted and abridged accounts be abolished?
At the moment, there is no official deadline for the Companies House changes to be implemented. However, if you currently submit filleted or abridged accounts, you need to be aware that these will be withdrawn in the relatively near future. If you’re a THP client and you have any questions about this or any other business topic, please do get in touch.
About Jon Pryse-Jones
Since joining THP in 1978, Jon Pryse-Jones has been hands on with every area of the business. Now specialising in strategy, business planning, and marketing, Jon remains at the forefront of the growth and development at THP.
An ideas man, Jon enjoys getting the most out of all situations, “I act as a catalyst for creative people and encourage them to think outside the box,” he says, “and I’m not afraid of being confrontational. It often leads to a better result for THP and its clients.”
Jon’s appreciation for THP extends to his fellow team members and the board. “They really know how to run a successful business,” he says. He’s keen on IT and systems development as critical to success, and he continues to guide THP to be at the cutting edge and effective.
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