Small companies and micro-entities face a significant change in financial reporting from 1 April 2028, when new Companies House filing requirements are due to take effect. Although the implementation date provides businesses with time to prepare, the reforms will affect accounting processes, disclosure decisions, software arrangements and board approval timetables.
The changes arise from the Economic Crime and Corporate Transparency Act 2023 and are intended to improve the accuracy, transparency and usefulness of information held on the company register. They also strengthen director accountability and reduce opportunities for inaccurate reporting, fraud and financial crime.
One of the most important changes is the requirement for small companies and micro-entities to file a profit and loss account with Companies House. Businesses will be able to prevent this information from appearing on the public register, although the process for choosing that option has yet to be confirmed. Even where public disclosure is restricted, the information will remain available to government bodies and law enforcement agencies.
Boards should therefore begin considering whether they are likely to use the public disclosure exemption. This decision may be particularly relevant where detailed financial information could reveal commercially sensitive information about margins, costs or trading activity. The choice should be discussed formally and recorded appropriately rather than left until the filing deadline approaches.
Annual accounts will also have to be submitted through commercial software using iXBRL, a digital reporting format that makes financial information readable by both people and computer systems. The existing Companies House web-filing service and paper filing routes will no longer be available for annual accounts from April 2028, although they will remain in use for certain other statutory filings.
This requirement will apply to companies of every size and type, including businesses that currently prepare and submit their own accounts. Companies using external accountants will need to establish whether their advisers have suitable software, tagging capabilities and submission processes. Businesses filing independently will need to identify an appropriate commercial solution and understand any additional costs or training requirements.
Companies that already submit tagged accounts to HMRC may be able to reuse some of the underlying tagging work. However, Companies House and HMRC submissions remain separate, so existing tax filing arrangements should not automatically be treated as sufficient.
The move to iXBRL also has implications for timing. Tagging, reviewing and validating financial statements can add work to the accounts preparation process. Boards that currently approve accounts close to the statutory deadline may need to bring forward their internal sign-off dates. Allowing additional time could reduce the risk of technical problems, last-minute corrections or late filing.
The option to submit abridged or filleted accounts will also be removed. Small companies and micro-entities that have previously limited the information placed on the public register will instead have to file their full statutory accounts. These will include the balance sheet, profit and loss account and, where applicable, the complete auditor’s report.
Audit-exempt companies will face an additional governance requirement. Directors will need to include an enhanced statement on the balance sheet identifying the exemption being claimed and confirming that the company meets the relevant conditions. Company secretaries should ensure that the board’s consideration and approval of the exemption are properly documented.
The reforms will also restrict how frequently a company may shorten its accounting reference period. In most circumstances, shortening will be permitted only once every five years. A business seeking to shorten the period more frequently will need to provide a commercial reason. This change is intended to prevent accounting-period adjustments from being used repeatedly to delay filing.
The overall compliance burden is likely to increase. Software expenditure, adviser costs, internal administration and accounts preparation time may all rise. The effect could be particularly noticeable across groups with numerous subsidiaries or complex reporting structures. Early assessment should allow these costs to be incorporated into budgets and resource planning rather than emerging unexpectedly near the implementation date.
Law Debenture Corporation plc (LON:LWDB) provides a wider range of services including corporate and pension trusts, process agent services, treasury management, corporate services including for special purpose vehicles, structured finance administration and whistleblowing services.
