Is the Economic Crime and Corporate Transparency Act 2023 a new Companies Act?

Is the Economic Crime and Corporate Transparency Act 2023 a new Companies Act?

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Small companies will be required to file a profit and loss account and directors’ report. This will ensure that key information such as turnover is available on the public register.

Companies will no longer be able to file abridged accounts.

A timetable for implementation of the new rules has not been set as Companies House must update their systems first . Any changes will not affect accounts due from 1 January 2024.

Under the new rules, amendments to the small companies filing requirements require the preparation of annual accounts in accordance with section 396 CA 2006.

In future, small companies will have to file a profit and loss account, and directors’ report. Key information such as turnover will be available on the public register at Companies House. A company is defined as small if it meets two of the following criteria: turnover of less than £10.2m, £5.1m or less on balance sheet and 50 employees or fewer.

Micro-entities with turnover of less than £632,000, balance sheet of £316,000 and 10 employees or under, must prepare annual accounts in accordance with the requirements of section 396 CA 2006, which will require the preparation of a profit and loss account. They will not have to produce a directors’ report.

Directors who use the audit exemption rules, including dormant companies, will have to file an exemption statement, identifying the exemption being relied on and to confirm that the company qualifies for the exemption.

This additional statement is intended to act as a deterrent to criminal activity and to provide additional enforcement evidence.

The new rules are also meant to crack down on abuse of dormant company rules.

Evidence from law enforcement agencies shows that some companies file dormant company accounts and claim the dormant audit exemption, despite their bank accounts clearly showing that the company does not meet the definition of a dormant company. The additional statement is intended to act as a deterrent and help Companies House address such offences in the future.

The government plans to make further changes to reporting rules in a future amendment to the Act, including mandating digital filing, full tagging of financial information in iXBRL format, and a reduction of the number of times a company can shorten its Accounting Reference Period.

With thanks to Sara White, Editor, Accountancy Daily. Her article appears in Accountancy Daily. If you wish to see the full article, subscribe to Croner Lite for your complimentary copy.

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