Aimed at improving financial transparency and accountability, the Economic Crime and Corporate Transparency Act (ECCTA) introduces significant changes, including mandatory filing of profit and loss (P&L) accounts by small and micro-entities. Indication has now been provided as to when these changes come into effect with some stakeholders having already received communications outlining the reforms.
A central element of the reform is software-only filing. From 1 April 2027, Companies House will no longer accept paper or web-based account filings. All company accounts will need to be submitted using commercial software. This move aims to streamline submissions, improve data quality and make filings more secure and traceable. Companies that don’t currently use software will need to either obtain it or rely on their accountant to file on their behalf.
Filing options will also be impacted. From April 2027:
- Micro-entities will be required to file both a balance sheet and a profit and loss account. Directors’ reports will remain unnecessary.
- Small companies must submit a balance sheet, a directors’ report, an auditor’s report (if not exempt), and a profit and loss account.
The option to file abridged financial statements will be abolished. However, under section 468A of the Companies Act 2006, there may be discretion for the registrar to withhold certain P&L data from public view, although how this will be applied remains unclear.
In addition, the audit exemption thresholds have recently been increased for accounting periods beginning on or after 6 April 2025, meaning more companies can claim exemption. A new requirement will see directors stating explicitly on the balance sheet which exemption is being claimed and confirmation that the company qualifies for the exemption.
Another change relates to shortening accounting reference periods. Companies will only be allowed to do this once every five years. Further changes will require Companies House approval and a valid business reason.
Please speak with your usual contact if you have any further questions.