Companies House has begun rolling out a significant set of reforms under the Economic Crime and Corporate Transparency (ECCT) Act. These changes are part of a wider effort to modernise company filings and bring the UK in line with international best practice.
Most notably, these changes will affect certain business proceedings, including a number of new requirements companies will need to adhere to.
Software Filing Becomes Mandatory from April 2027
As of 1 April 2027, if you run a UK company, you will be required to file your annual accounts using commercial software.
Whether you file these yourself, or work with an accountant or agent, this change applies across the board. As part of its drive to modernise and digitise filing routes and prevent economic crime, Companies House is retiring paper and web-based filing for accounts.
After April 2027, the old-fashioned paper and web routes for accounts will be closed. The web service will remain open for other statutory filings.
While this change may sound daunting, there are a few advantages that filing using commercial software will bring:
- no postage costs;
- cheaper to file documents that have a fee;
- a faster, more secure delivery with immediate acknowledgement of receipt;
- automatic confirmation when your filing is accepted or rejected;
- less chance of errors and rejected filings; and
- a reduced risk of late filing penalties.
Choosing the Right Software for Your Business
If you have not already explored the world of commercial software, now’s the time. There are a variety of options out there, from simple to more sophisticated packages, catering to every type and size of business.
Many software providers offer flexible payment plans, including one-off payments or subscription-based services to suit your business and personal preferences. Companies House even provides a software look-up tool to help you compare and find the right product, which you can find here.
The switch to software-only filing also brings with it a new requirement: accounts must now be electronically tagged using iXBRL.
This international standard combines HTML with machine-readable tags, so the same document can be understood by both people and computers. To comply, you’ll need software capable of generating and tagging your accounts accordingly.
Dormant Companies Are Also Affected
It’s important to note that this change applies to dormant accounts i.e. inactive companies. Therefore, even if your company has been dormant, you will still be required to adopt the software filing process by 2027.
New Rules for Small and Micro-Entity Companies
Small and micro-entity companies should take particular note of the upcoming changes.
Micro-entities will be required to file both a balance sheet and a profit and loss account. Small companies will need to file a balance sheet, a directors’ report, a profit and loss account, and, unless exempt, an auditor’s report.
Other Important Changes
The option to file abridged accounts is also being removed. Additionally, if a company is claiming an audit exemption, directors will now be required to clearly state on the balance sheet which exemption is being claimed and confirm that the company qualifies.
One more thing: companies wanting to shorten their accounting year can only do so once in five years without giving a solid business reason. It’s a small change but worth knowing about.
Time to Prepare
Luckily, there is plenty of time to prepare.
If you are still filing the traditional way, now’s the perfect chance to begin exploring your software options or check that your accountant is ready for this shift.
Moving to digital filing will make life easier and help ensure your business runs smoothly, working towards building a more secure, modern business environment.
If you require any additional support or information on this topic or, would like to explore how we can address your legal needs, please do not hesitate to get in touch with our wonderful team.
You can reach us by telephone on 01276 536 410 or via email at hello@hartleylaw.co.uk
