Companies House have confirmed limited companies can expect changes to the requirements for submitting annual accounts. The move to filing accounts using software will be phased in over the next 2 or 3 years so the exact start date is not yet clear. For now, we can look at what the requirements are expected to be.

What are the annual accounts filing changes?

The new filing requirements for limited companies are designed to make more information available on the public register, and to reduce errors. The update to the rules is in two parts:

• You will need to file your company accounts using software – the use of paper, CATO (Company Accounts and Tax Online), or the Companies House Web Filing service will stop.
• Companies, including micro-entities which were previously exempt, must include profit and loss accounts with their annual accounts. Abridged accounts will no longer be accepted.

What will companies need to include in their annual accounts?

Companies House say the new filing rules mean small and micro-entities will need to prepare their annual accounts to comply with ‘section 396’. This is the legislation that sets out what information limited companies must provide when they submit their accounts, including:

• Which part of the United Kingdom the company is registered (for instance, Scotland or England)
• Company registration number
• Whether the company is a public or a private company
• If it is limited by shares or by guarantee
• The company’s registered office address
• If necessary, to confirm if the company is being wound-up
• The balance sheet as it is on the last day of the company’s financial year
• The profit and loss account as at the last day of the financial year

What do the filing changes mean for small companies?

The Companies House reforms mean that small companies will need to file a profit and loss account and a director’s report when they submit their annual accounts. For these purposes a small company is one which meets any two of these criteria in a year:

• Turnover of £10.2 million or less
• £5.1 million or less on its balance sheet
• 50 employees or fewer

What do the new accounts filing rules mean for micro-entities?

A company is a micro-entity if it satisfies any 2 of the following criteria during the year:

• Turnover of £632,000 or less
• £316,000 or less on its balance sheet
• 10 employees or fewer

Under the new rules, micro-entities must prepare annual accounts which include profit and loss figures, but unlike small companies they won’t need to provide a director’s report.

What software should I use to submit my company accounts?

Companies House have published a list of the software they’ve tested for filing annual accounts, although it’s up to you to make sure the software you choose is suitable for your business. You’ll also need to register for online filing before you get started. Once the new rules roll out you won’t be able to submit your accounts using:

• Paper forms – including for larger companies with complex accounts which can currently only use paper filing
• Company Accounts and Tax Online (CATO)
• Companies House Web Filing service

When do the changes take effect?

Companies House have said they hope to roll these changes out of the next few years, but have not given a timeline beyond that.

What happens if I don’t comply with these changes?

Digital record keeping and filing is slowly being introduced for all businesses. Once these changes roll out and become mandatory, you won’t be able to submit annual accounts without using software.

The most likely scenario is that companies will be given late filing penalties if they don’t comply, but it’s possible a new penalty system will be introduced as part of the reforms.

 
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