Only days since letters have been sent to hundreds of thousands of small and micro companies informing them of mandatory P&L reporting, the government now says the change is only their ‘intention’.
A week after confirmation that smalls and micros will have to file profit and loss, and balance sheets, with Companies House from April 2027, there are signs the government may be wavering on the plan, which has still not been put in statute as it requires a final statutory instrument.
While it appears that small companies will no longer be allowed to file abridged accounts from 2027, as set out under the current plans at Companies House, the commitment to the full reporting changes looks like it could be in line for a U-turn.
In a backgrounder, a Department for Business & Trade stated that it was only ‘the intention’ to bring in the more rigorous financial filings from 1 April 2027, confirming that ‘from that point the intention is that they will be required to provide a profit & loss statement, using the formats set out in Financial Reporting Standards and subject to forthcoming Regulations’.
When asked to clarify the confusion about the plans, a Department of Business & Trade spokesperson said: ‘This Government is committed to avoiding undue burdens on businesses as part of our Plan for Change.’
The new reporting rules are part of the Economic Crime and Corporate Transparency Act 2023, which was designed to improve transparency, reduce fraud and abuse of the company register, and clamp down on fraudulent company registrations.
The removal of abridged accounts would affect some small companies which opt for this level of disclosure, specifically those with turnover under £10.2m, balance sheets under £5.1m, and fewer than 50 employees.
The FT reported that it had been told by an ‘ally’ of the business secretary Jonathan Reynolds that ‘this will not happen as long as Jonny is in place’. However, many of the most criticised and costly measures in the Employment Rights Bill are going ahead despite extensive consultation with business community, particularly smaller companies which will be worst affected by the higher costs of employment.
There are certainly mixed messages for businesses with growth being stressed as the primary objective for the government, while costly regulation is being rolled out including a raft of changes to employment law, day one employment rights, rigorous identity verification requirements at Companies House and the tax increases for employer NICs.
At the same time, a major extension of Making Tax Digital, driven by HMRC’s desire to reduce ‘fraud and error’ kicks in for sole traders, self-employed and property landlords with annual income over £50,000 from April 2026, all adding to costs for all sizes of business.
Useful links
Croner-i provides detailed guidance on changes to company law and reporting requirements, available through the Company law and Economic Crime and Corporate Transparency Act 2023 Quick Links.
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