Limited companies in the UK will soon have to change how they file their accounts as part of a new Government bill that will reform Companies House operations. The changes will impact all UK-registered companies.
The Economic Crime and Corporate Transparency Bill aims to increase transparency in company information and combat economic crime through new measures.
The Bill has been going through Parliament since September 22, 2022, and aims to increase transparency by providing the public with more financial information, which will aid in the fight against economic crime, and from a credit data perspective, credit check companies to verify a company registration status and better understand the businesses and suppliers they work with. As part of this reform, small and micro companies will have fewer options for filing their accounts.
The Bill is believed to be the most remarkable change to Companies House since its inception. These sweeping changes will revamp Companies House’s role from mere data recipients to a more robust protector in the fight against financial fraud.
How will the proposed legislation affect small businesses? This guide will provide you with all the details of the changes, their impact on companies, and most importantly, the necessary steps you should take now and in the future.
The purpose of the changes is to enhance the accuracy of the information regarding the owners of each company. This will provide greater confidence to businesses engaging in transactions with other companies. Small business owners can rely on the register to investigate potential suppliers and partners.
A small or micro company that prepares abridged or full accounts for its members does not have to file a copy of its profit and loss account and/or the director's report with Companies House. This minimal level of disclosure can potentially appeal to fraudsters wishing to present a false image of the company.
To prevent fraud and support business growth, it is crucial to have transparent and high-quality information. As part of a new framework, all small companies, including micro-entities, must file their profit and loss accounts.
This information, such as turnover and profit or loss, will be available on a public register, providing better insight for creditors and consumers to make informed decisions. This will also enhance the usefulness of the register for users.
Without this transparency, lenders, and creditors may find it difficult to assess the creditworthiness of small businesses, causing some hesitation in offering finance which can hinder the growth of small businesses.
We are closely monitoring the Companies House reforms as they still have quite a few hoops to jump through, but they could land as early as the summer of 2023.
The bill is currently in the Committee Stage in the House of Lords before it receives Royal Assent and becomes law.
Submitting small business accounts will be easier with the new reforms because they will be the same as those prepared for shareholders.
Companies House can enhance its ability to prevent economic crimes like money laundering by verifying identities and comprehensively understanding a company's financial situation.
These new reforms will improve a company’s filing history allowing businesses to analyse enhanced data provided by Credit Reference agencies in the UK like CoCredo. It will enable us to give a clearer picture of a company’s financial performance and stability, provide accurate credit scores and recommend the maximum credit limit or score and assess their creditworthiness with confidence. The ability to verify the identity of anyone setting up, running or owning a UK company will make a huge difference in the fight against fraud and data transparency.
Our credit reporting and monitoring systems are designed to safeguard thousands of our business customers from bad debts. With access to company data across 235 countries, our cloud-based portal provides round-the-clock accessibility with regular updates.
We aggregate data from multiple sources globally to achieve best-in-class solutions so our customers can view the best available data in an easy-to-read report.
To find out more information regarding our UK and Ireland company credit reports or would like to request a UK business credit report free trial, you can speak to us now at 01494 790 600 or drop our customer services team an email.
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