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14th November 2023

Update from Roake & Cook - Economic Crime and Corporate Transparency Act

Due to the passing of the Economic Crime and Corporate Transparency Act last week, small companies will soon have to file a profit and loss account with Companies House.

Whilst we are waiting on the exact disclosure requirements, the bare minimum is likely to include turnover, gross and net profit.

This will be a significant change for many small business owners, as that information is not currently publicly available (as long as certain requirements are met).

So, what are the implications?

Well, the financial performance of your business becomes more visible.

Employees, customers, suppliers, family, friends, and anyone who is interested, will be able to see your turnover and profit or loss for the year.

The aim is that this increases transparency for business deals and assessing credit risk, whilst also reducing fraud.

Could it cause more problems for small businesses though?

Some business owners may decide that unincorporating is the best choice for their business, so that this financial information does not become publicly available.

That would have tax implications, which will need to be assessed before any decision is made.

We are waiting on details of when this change will come into effect, but it will be important for business owners to have this conversation with business partners and advisors, well in advance of the change coming into effect.