Companies House Reforms: What they mean for your trade business

New measures at Companies House are changing how many limited companies in the UK report their financial information. Recent laws and amendments created by Parliament have been introduced to improve corporate information transparency and combat economic crime. These new rules fall under the Economic Crime and Transparency Bill.

When it comes to your trade business, we want you to better understand how the proposed legislation affects small businesses. The team at Rhino Trade Insurance is here to distil all the information you need. 

Overview of Companies House reforms

Companies House is there to serve the interests of Limited Companies in the UK. Information about limited companies, such as directors of trade businesses and business accounts, is registered with Companies House.

Here is a summary of the important steps that will be implemented in the new legislation:

• Accounting for profits and losses will be mandatory for all small businesses.
• Accounts must be filed digitally because it will be impossible to do so otherwise.
• Identity verification is required for anyone establishing, managing, or controlling a company.
• Companies House will have increased authority to challenge suspicious evidence and do cross-checks with other public and private sector organisations. 
• Companies House will also have more power to check, remove, or deny information.

The government claims that by implementing steps like identity verification, it will provide businesses peace of mind that the data on the register is accurate and prevent bogus organisations from being registered.

You must include a separate statement by any directors on the balance sheet if you currently have an audit exemption.

What else can you expect in the changes?

Small trade businesses can streamline their filing

Limited companies are required to submit accounts to Corporations' Houses each year in order to record their performance throughout the course of the accounting period. In most cases, such as during your first year of business, your accounting period will coincide with the fiscal year covered by your company's annual accounts.

The proposed changes will restrict the way you file documents. You will now only be able to file through a digital format in authorised software only. 

Micro-entities and small companies will be the only two filing alternatives available to small businesses. This implies that the option to submit "abridged accounts" without a directors' report or a profit and loss statement will no longer be available.

According to the government, this will help prevent confusion and cut down on expensive mistakes. It claims that it will also raise the value of the data kept in the register.

Submitting a profit and loss statement

As a limited company, you are likely accustomed to submitting profit and loss statements to HMRC; however, Companies House will soon need this information from all firms as well.

The government anticipates that this would boost transparency about registered firms, albeit it is unclear how specific the reports must be for Companies House.

When will the reforms be made?

Although the exact date of the Companies House reforms' implementation is unknown, it is anticipated to occur sometime in 2023.

The bill still needs to pass through a few more stages in the legislative process before receiving Royal Assent and is currently in the Committee Stage in the House of Lords. The planned legislation becomes law at this point.

Companies House Executive Louise Smyth is quoted as: "The number one priority for next year is preparing for the major reforms that are expected through legislative change. 

These reforms are really exciting as they will give us a greater role in tackling economic crime, but they will impact every aspect of our operation and how users interact with us. Our transformation remains the biggest priority so that we have solid foundations to build on and have the brilliant services that support the economy and all of our users."

You can read what the Companies House Exec said in full here.

Further reading can be found here. 

Why Choose Rhino Trade Insurance?

Running your own business is tough, and having to deal with new rules can cause headaches; that's why we are here - to help your business run as smoothly as possible. 

Having trade insurance is essential if you own your own business and interact with clients. You need to protect yourself whether you lead a team of ten or operate as a lone ranger!

For tradesmen and women, Rhino Trade Insurance has created some of the best insurance policies on the market. In a variety of circumstances, including personal accidents, legal costs, tool theft, and professional negligence, your business is covered by our policies.

Why not give our team a call right away? They can help you set up everything you need in minutes. Call our team today on 0116 243 7904, or if you want to handle things independently, submit a quotation request online.