Brought to you by
Bright full colour logo
Bright was created in 2021 when Thesaurus Software Ltd. and Relate Software Ltd. decided to join...
Save content
Have you found this content useful? Use the button above to save it to your profile.

Get your practice ready for Companies House reform

2nd Feb 2024
Brought to you by
Bright full colour logo
Bright was created in 2021 when Thesaurus Software Ltd. and Relate Software Ltd. decided to join...
Save content
Have you found this content useful? Use the button above to save it to your profile.

After a difficult passage through parliament, the ‘biggest change to Companies House since corporate registrations were established in 1844’ is finally coming into force. The Economic Crime and Corporate Transparency Act is indeed a watershed in UK corporate reporting, reshaping the financial disclosure landscape for small companies and micro-entities. The Act not only revises existing frameworks but also places new responsibilities squarely on the shoulders of accountants when it comes to tackling economic crime and improving transparency.

Adapting to the changes risks creating significant extra work for businesses and their accountants, as well as potentially meaning that even smaller businesses may have be required to have potentially sensitive information open to public view. Here we look at the key information accountants need to know and how the right tools can smooth the transition.

What are the relevant changes for accountants?

As the default compliance partners for small businesses, the burden of reporting and disclosure usually lands on accountants. The Economic Crime and Corporate Transparency Act increases both the scope and the detail when it comes to tracking and documenting key information about you and your clients’ business activities.

  • Mandatory Reporting: Small companies and micro-entities – covering both clients and practices themselves – are now required to file comprehensive profit and loss accounts, increasing the scope of financial disclosures.

  • Director’s Reporting: The requirement for small companies to submit director’s reports deepens the transparency regarding corporate governance.

  • Digital Filing: The Act mandates the electronic filing of annual accounts in iXBRL format, phased in over the next two to three years, with more precise timings to be shared soon, and phasing out the provision for abridged accounts.

These modifications aim to bolster financial transparency but mean that more data than ever will be sitting in publicly accessible form – meaning that theoretically clients could look up their accountants' financials or businesses could look at their competitors' information.

What does this mean for accountants?

Compliance changes usually come in waves – a scramble to adapt then an adjustment over the medium term. However, like the much-delayed MTD transition, this is a change that also forces fundamental changes in the way that practices work with technology and design their workflows. 

  • Additional compliance work: Accountants will likely see an uptick in workload due to the increased detail required in reporting – including more regular sourcing of client information, preparing accounts for businesses formerly spared or able to simply submit abridged accounts. 

  • Expanded client collaboration: Clients who were once able to keep their finances private may be unenthusiastic about having to submit publicly available accounts. The onus will be on advisers to reassure clients about the implications of publicly accessible financial data and get their buy-in. 

  • Disincorporation for some: For those that don’t want their full P&L in the public domain, whether it’s due to sensitive information disclosure or a reluctance to engage with the extra work, accountants will have to support changing company structure.

  • Digitisation and workflows: The drive for digital filing with full tagging of financial information in iXBRL format requires a tech-forward approach, making software solutions essential for compliance and efficiency.

Adapting your workflow for new rules

While practices have embraced digitisation at a steady pace over recent years, the additional workload and reporting mandated by the changes are likely to lead to accountants needing to ensure that their software tools can cover clients previously spared rigorous reporting.

Bright’s broad suite of software solutions covers a range of essential use cases, with regular updates to ensure they’re fit for the latest compliance and advisory needs. 

  • Integrated functionality: Bright’s accounts production software, BTCSoftware, includes streamlined integration with Companies House for hassle-free electronic filings and is fully XBRL and iXBRL compatible.

  • Simple transition management: Bright's practice management software, BrightManager helps you track your client-base at scale, creating a single source of truth for client work, work-to-do and reporting work flows.

  • Automation and accuracy: Our cloud tax and comliance software, BrightTax, enables you to automate data entry and error detection across your accounts production to reduce risks and manual tasks across your client base to create more detailed accounts without needing extra work.

Making the change work for you and your clients

As the demands fall on both accountants and clients, there is an opportunity to create a more efficient, valuable and technology-led approach to client relationships. Practices with the right tools in place have the chance to offer a streamlined, profitable service to clients who may be underserved by their current accountant, reducing manual work on both sides and offering improved peace of mind.
With the right tools on your side, you can go beyond updating your compliance workflow to enhance the value you offer to current and incoming clients. To find out more, why not book a demo with one of our technology experts?

Book a demo

Related articles: