The government has confirmed that delayed changes to accounts filing through Companies House, affecting charitable companies, will now come into effect in 2028.
Originally scheduled for next year, the changes require all organisations to file accounts in a digital format, meaning an end to paper-based systems.
Meanwhile, from April 2028, small and micro companies will no longer be able to prepare and file abridged accounts.
These will need to file profit and loss accounts with Companies House, as other companies do, but will have the option to opt out of having these published on the public register.
Other changes include a requirement to file parts of the accounts and reports together and a reduction in the number of times a company can shorten its accounting reference period.
Companies claiming an audit exemption will have to give an enhanced statement from their directors on the balance sheet.
The changes will affect charitable companies but not charitable incorporated organisations (CIOs), which only file with sector regulators including the Charity Commission.
End of paper-based filing systems
The measures form part of the Economic Crime and Corporate Transparency Act 2023 and were delayed due to concerns about the impact some of the reforms might have on businesses.
After engagement with stakeholders, the government this week confirmed that it would proceed with the accounts reforms.
From April 2028, all UK-registered companies will have to file their accounts in Inline eXtensible Business Reporting Language (I-XBRL) format by using commercial software.
This will apply to companies that file their own accounts and those that use third-party agents or accountants to file them.
“From this date, our web and paper-based filing systems will be closed for accounts filings,” Companies House said.
“This’ll improve the quality of financial data for register users and provide more opportunities over time for companies’ accounts data to be aggregated, compared and analysed for use more widely.”
‘Be realistic about timetables’
Katherine Peacock, associate director at accountancy and advisory firm Buzzacott, told Civil Society the changes will affect charitable companies with year-ends after 30 June 2027, “assuming that the full nine-month period to file accounts is utilised”.
“Charities with later year-ends will be able to file paper accounts for one more year as long as they can be approved and filed before 31 March 2028 but it’s important to be realistic about timetables and whether this is achievable,” she said.
Civil Society asked Peacock whether charitable companies should consider switching to the CIO model as a result of the changes.
In response, she said: “For unincorporated charities, considering incorporation the CIO may be sensible, but a charity that’s already incorporated as a company limited by guarantee should consider carefully whether the reduced regulatory burden outweighs the management time and cost of conversion.
“It’s also important to remember that the Charity Commission doesn’t maintain a publicly available ‘register of charges’ in the same way as Companies House so obtaining loan finance secured on property may be more difficult for a CIO.
“This structure may not be right for every organisation and the trustees should give any planned change in structure careful thought.”
Changes ‘mustn’t deepen burden of dual regulation’
Richard Sagar, head of policy at Charity Finance Group (CFG), told Civil Society: “CFG supports efforts to improve the quality, security and usability of accounts data, but changes must be implemented in a way that’s proportionate for charitable companies and doesn’t deepen the burden of dual regulation.
“The decision to delay implementation to April 2028 is welcome and should give charities, advisers, software providers and regulators more time to prepare. However, the extra year mustn’t simply postpone the problem.
“It should be used to ensure that software-only filing works effectively for charitable companies, including those preparing SORP-compliant accounts, and that charities have access to appropriate and affordable accounting software.
“The priority should be a charity-specific digital filing route, developed with relevant stakeholders, with a clear ambition to move towards a ‘file once’ approach for charity accounts.”
