The Economic Crime and Corporate Transparency Bill received Royal Assent in October 2023 meaning filing requirements for small companies (including LLPs) are set to change, leading to more information such as turnover and profit being publicly available.
Currently, small companies (typically those with turnover less than £10.2m) only have to file a very limited amount of information at Companies House, as they can opt to file abridged accounts including a balance sheet but not a profit and loss account. Under the new Economic Crime and Corporate Transparency Act 2023, all companies will be required to include a profit and loss account disclosing their turnover, aggregate expenditure and profit.
It is understood that Companies House might have powers to restrict elements of the profit and loss account from being accessible on the public record but as yet there is no detail on how this would work in practice.
Small businesses that are unincorporated – therefore, those that do not have a suffix “Ltd” or “LLP” – do not have to publish their accounts and are unaffected by this change.
Other changes that are due to be implemented are the inclusion of a directors' report and a requirement for accounts to be filed digitally.
A timetable has yet to be set for these changes to come into practice but small companies should start thinking now about the effect they might have on their business. In the professional practices world, there is a general reluctance on the part of small business owners to share financial information with their staff. Many non-partner fee earners in law, architectural and surveyor practices may not be aware of their firm's turnover or the profit its partners make unless they work in firms whose turnover is over £10.2m (other criteria apply but turnover is the main one) where the information is publicly available at Companies House. When the changes are rolled out, such information could be publicly available for small companies too. It might be sensible to start preparing for this ahead of time.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.