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New Reporting Regime for Small Companies

Legislation passed by the government on 26 October introduces new reporting requirements for small companies.

The Economic Crime and Corporate Transparency Act aims to improve the transparency of UK companies, tackling money laundering and fraud. It gives Companies House more investigative and enforcement powers to become “a more active gatekeeper over company creation and custodian of more reliable data”. This includes verification checks to ensure that new companies are set up by real people rather than fake identities.

How does this impact small companies?

The new legislation means that small companies and micro-entities must file a profit and loss account with Companies House.

It is unclear whether this information will be publicly accessible via Companies House. Small companies’ profit margins could potentially be exposed, impacting future negotiations with clients.

The most important step for now is to be prepared. Talk to us about what’s involved for your limited company. We’ll offer practical, tailored advice without jargon.

Which small companies are affected?

Three possible criteria define a small company. If your company meets at least two of these factors, you need to comply with the new legislation:

  • turnover of £10.2m or less,
  • balance sheet value of £5.1m or less, or
  • 50 employees or fewer.

Similarly, micro-entities meeting at least two of the following criteria must file a profit and loss account:

  • turnover of £632,000 or less,
  • balance sheet value of 316,000 or less, or
  • 10 employees or fewer.

Next steps

Now that the Act has been passed, secondary legislation will be issued. This will detail the form and content of the profit and loss account required by Companies House. The Hargreaves Owen team will keep you updated. Contact us to find out how we can help you comply with current and new legislation without obligation.

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