
If you would like to know more about Clever Accounts, please contact us on 0113 518 8800
The UK government's plan to overhaul profit and loss (P&L) filing requirements for small companies, introduced under the Economic Crime and Corporate Transparency Act 2023, is under review and may be scrapped. The proposed changes, set to take effect in April 2027, would require small and micro-businesses to file detailed P&L statements with Companies House, ending exemptions that currently allow them to submit abridged accounts. However, Business Secretary Jonathan Reynolds has signalled a potential U-turn due to concerns about the burden on small firms.
The reforms aimed to enhance transparency by mandating small companies—those with turnover under £10.2m, balance sheets under £5.1m, and fewer than 50 employees—to publicly file P&L statements. Supporters argue this would improve accountability and provide clearer insights into financial health, helping to combat fraud and financial misrepresentation.
However, small business owners, accountants and advocacy groups have criticized the changes, citing increased administrative costs and the risk of exposing sensitive financial data to competitors.
The Business Secretary Jonathan Reynolds has expressed concerns that the reforms could be overly burdensome for small businesses. A government source quoted Reynolds as saying, “We have paused them — Jonny is worried it’s too burdensome,” highlighting his intent to reduce regulatory hurdles for small firms. An ally of Reynolds told the Financial Times, “This will not happen as long as Jonny is in place. It doesn’t fit with our plans to cut regulation,” aligning the decision with the Labour government’s broader industrial strategy to reduce administrative costs for businesses by 25%.
Accountants are divided on the issue. Some support the transparency goals, believing they could reduce financial misreporting, others emphasize the challenges for small firms, many of which lack the resources to adopt new accounting software or comply with detailed filing requirements without significant support. Martin McTague, national chair of the Federation of Small Businesses, warned, “This opens the door wide to competitors snooping on margins and for large companies in supply chains to scrutinise smaller suppliers’ finances. It could give big players an unfair advantage and damage small firms’ negotiating power.”
Reynolds’ decision to pause the reforms reflects a commitment to balancing transparency with the needs of small businesses. The government is engaging with stakeholders to assess the impact of the proposed changes. Small companies are advised to monitor updates from Companies House and prepare for potential adjustments to filing requirements. Further details are expected in the coming months as consultations continue.
For businesses seeking guidance, resources such as Companies House’s filing guidance and support from your dedicated accountant are crucial. Please get in touch if you have any queries.
Sign up to Clever Accounts and get fixed fee hassle-free accounting