Controversial new proposals have been put forward in a white paper published by BEIS last month.
As part of the government's drive to improve corporate transparency and crack down on financial crime, it is proposed that the filing options for small companies will be reduced to just two: micro-entity or small company accounts. The abridged and "filleted" options, which are widely used at the moment, would be removed, consequently small companies' profit & loss accounts - which contain detailed information about turnover, expenditure and taxes - would be freely available to members of the public.
The proposals are likely to prove controversial since it has long been the view that, in striking a balance between the public interest and maintaining individuals' privacy, it was not considered appropriate to force smaller companies to place so much financial detail in the public eye. Medium and larger companies' profit & loss accounts already appear online.
The white paper includes an extensive list of proposals. In addition to the reporting changes, other recommendations include:
- strengthening the power of the registrar to check and enquire into data held on the register, to investigate fraud and error and to amend or remove data;
- more stringent identity verification measures in respect of officers, PSCs, agents, and partners;
- a requirement for any corporate directors to have all-natural directors;
- corporate directors of non-UK registered companies will no longer be permitted;
- new controls over third party agents who register entities or provide other information to the registrar;
- new data sharing powers with other enforcement agencies;
- closing perceived "loopholes" in accounting reference date rules; and
- stronger data validation checks over financial data.
The government is also considering a "File Once with Government" approach so that accounts only need to be filed once with government; different government bodies (e.g. HM Revenue & Customs) would then extract the information they need from one central place.
There is as yet no timetable for implementing the new proposals, but it is expected that they will form part of the Economic Crime Bill, which was introduced in Parliament earlier this week.
There are currently 4.4 million active companies registered with Companies House, the vast majority are small or micro entities. Around 650,000 new companies are formed every year.