Filing accounts by software only

The Economic Crime and Corporate Transparency Act 2023 introduces changes to company law, including those related to the filing of accounts for small companies, with the aim of simplifying requirements and improving the quality and usability of data held at Companies House.

Measures set out in the Act aim to improve transparency by making more financial information available to the public.[CH1]

Filing accounts by software only

From 1 April 2027, companies will no longer be able to file their accounts using web or paper versions but instead must use approved commercial software. This change also includes the filing of dormant accounts.

While this will create efficiencies and increase security for companies when filing, it is seen to be a critical step towards improving the quality of data that is filed. The government has confirmed that software-only filing will meet their priority to prevent economic crime and bring the UK in line with international best practice.

Changes to small company filing options

From the same date there are filing changes for small and micro-entity companies:

• Micro-entity companies will be required to file a copy of their balance sheet and profit and loss account.
• Small companies will be required to file a copy of their balance sheet, directors’ report, auditor’s report (unless exempt) and profit and loss account.

There will no longer be the option to prepare and file ‘abridged’ accounts.

Since these changes were announced, there has been debate as to whether the government is set to U-turn after small companies and investors have warned of the difficulties these will create. In addition, recent press has highlighted the disconnect between these changes and  the government’s plans to cut regulation.

Further measures

Companies House has also confirmed further measures will be introduced on the same date:

• When claiming an audit exemption, directors will need to give an enhanced statement on the balance sheet. This will confirm that the company qualifies for the exemption and also which exemption is being claimed.
• Accounting reference period – until now, a company has not been restricted by the number of times it is able to shorten its accounting period, albeit it has only been able to lengthen its accounting reference period once every five years. A company will now have to provide a business reason if they wish to shorten their accounting reference period more than once within five years.

It would make sense for this change to go ahead as it will resolve the anomaly between the current restriction on lengthening the accounting date and no restrictions on shortening the date.

For more information, please visit gov.uk/changes-to-accounts or contact us.