Changes to filing rules set to be scrapped

New rules that would require small and micro companies to disclose their profit and loss statements for the first time are set to be scrapped, according to media reports.

The new Companies House rules were set to come into effect in April 2027, removing current exemptions when it comes to filing accounts.

The changes would give employees and customers will have clearer detail as to the profits that companies make and the dividends declared to shareholders.

Many small business owners were facing the fact that their own personal ‘earnings’ from a limited company would become public knowledge,

However, according to reports, business secretary Jonathan Reynolds is looking to step in to keep the current rules in place, after startups and investors warned of the difficulties the new rules would have created.

An ally of the minister was quoted in the Financial Times newspaper saying: “It doesn’t fit with our plans to cut regulation.”

If carried through, the new rules would mean much information which would not have been on the public record would no longer be private.

Micro-entities would be required to file a copy of their balance sheet and profit and loss account at Companies House.

Small companies would be required to file a copy of balance sheet, directors’ report, auditor’s report – unless exempt – and profit and loss account.

There would be also be a requirement for more information when claiming an audit exemption. Any company claiming an audit exemption would need to give an enhanced statement from their directors on the balance sheet.

The rules also aim to clamp down on abuse of dormant company status. Directors of dormant companies would need to specify which exemption is being claimed and confirm that the company qualified for the exemption.

However, opponents of the changes say that legislation that was designed to help tackle fraud and tax evasion would have the effect of forcing many taxpayers to put their private earnings on the public record.

Business leaders also raised alarms that the new requirements would ‘opens the door wide’ to competitors snooping on margins and for large companies in supply chains to scrutinise smaller suppliers’ finances – giving them an unfair advantage and damage small firms’ negotiating power.

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