Profit/loss to be made public for small companies
Discussion
Am I right in understanding that Companies House reforms which have already been passed mean that small businesses and micro entities are going to have to publish full profit and loss accounts through Companies House?
This means that everyone will be able to see your turnover, your costs, your profit which is fine for large organisations but very intrusive on one/few man organisations.
It won't cause much if any administrative burden but it will mean sole directors earnings from a company will be made public, if companies have a small number of customers, they will have evidence to squeeze the company. It might also frighten off customers who might feel uncomfortable dealing with small outfits.
I can understand the need for transparency but to make this information available from a simple Companies House search seems unfair to small companies.
This means that everyone will be able to see your turnover, your costs, your profit which is fine for large organisations but very intrusive on one/few man organisations.
It won't cause much if any administrative burden but it will mean sole directors earnings from a company will be made public, if companies have a small number of customers, they will have evidence to squeeze the company. It might also frighten off customers who might feel uncomfortable dealing with small outfits.
I can understand the need for transparency but to make this information available from a simple Companies House search seems unfair to small companies.
I'd heard it's coming in, with the final date and details to be confirmed.
Yes, it's bad news for small one director limited companies as your larger competitors will have an edge. Suppliers will also squeeze depending on how you're doing.
I know people that are planning to go back to being sole traders instead when the new rules come in.
There's not much difference in tax liability, plus companies may get hammered on dividends after the upcoming budget so you'll actually be better off.
Not very good planning, there should have been a cut off point so the small companies weren't affected.
Yes, it's bad news for small one director limited companies as your larger competitors will have an edge. Suppliers will also squeeze depending on how you're doing.
I know people that are planning to go back to being sole traders instead when the new rules come in.
There's not much difference in tax liability, plus companies may get hammered on dividends after the upcoming budget so you'll actually be better off.
Not very good planning, there should have been a cut off point so the small companies weren't affected.
Let's see what happens.
468A Use or disclosure of profit and loss accounts for certain companies
(1)The Secretary of State may by regulations make provision requiring the registrar, on application or otherwise—
(a)not to make available for public inspection profit and loss accounts, or parts of them, delivered to the registrar under—
section 443A (micro-entities), or
section 444 (other small companies);
(b)to refrain from disclosing such accounts, or parts of them, except in specified circumstances.
468A Use or disclosure of profit and loss accounts for certain companies
(1)The Secretary of State may by regulations make provision requiring the registrar, on application or otherwise—
(a)not to make available for public inspection profit and loss accounts, or parts of them, delivered to the registrar under—
section 443A (micro-entities), or
section 444 (other small companies);
(b)to refrain from disclosing such accounts, or parts of them, except in specified circumstances.
Eric Mc said:
The way it always used to be.
It was the price directors and shareholders had to pay for the "privilege" of "limited liability". It was only in the 1990s that reduced disclosure accounts were introduced.
Thanks. I always thought it was how it was. Didn't know it had changed. It was the price directors and shareholders had to pay for the "privilege" of "limited liability". It was only in the 1990s that reduced disclosure accounts were introduced.
768 said:
I'm not sure it's unfair to smaller companies, but it's yet another signal that the big boys are the ones politicians favour.
One reason I feel it's unfair is because it makes public, the income of a sole Director. What's more, a small company making a lot of money is likely to be pressured more to reduce pricing. Employers will also have ammunition to ask for a bigger cut.
Puzzles said:
Let's see what happens.
468A Use or disclosure of profit and loss accounts for certain companies
(1)The Secretary of State may by regulations make provision requiring the registrar, on application or otherwise—
(a)not to make available for public inspection profit and loss accounts, or parts of them, delivered to the registrar under—
section 443A (micro-entities), or
section 444 (other small companies);
(b)to refrain from disclosing such accounts, or parts of them, except in specified circumstances.
Yes I think they're still deciding which way to go.468A Use or disclosure of profit and loss accounts for certain companies
(1)The Secretary of State may by regulations make provision requiring the registrar, on application or otherwise—
(a)not to make available for public inspection profit and loss accounts, or parts of them, delivered to the registrar under—
section 443A (micro-entities), or
section 444 (other small companies);
(b)to refrain from disclosing such accounts, or parts of them, except in specified circumstances.
Accountants will be split on what is the best way forward, but I can't see how this will help crack down on fraud. The full P&L is already available to HMRC, so why not use that data. Small companies already have enough to deal with without competition, staff being nosey etc.
MaxFromage said:
Yes I think they're still deciding which way to go.
Accountants will be split on what is the best way forward, but I can't see how this will help crack down on fraud. The full P&L is already available to HMRC, so why not use that data. Small companies already have enough to deal with without competition, staff being nosey etc.
I agree with all that. Accountants will be split on what is the best way forward, but I can't see how this will help crack down on fraud. The full P&L is already available to HMRC, so why not use that data. Small companies already have enough to deal with without competition, staff being nosey etc.
Pistom said:
One reason I feel it's unfair is because it makes public, the income of a sole Director. What's more, a small company making a lot of money is likely to be pressured more to reduce pricing.
Employers will also have ammunition to ask for a bigger cut.
It's pretty easy to work out the profits of a small company from the balance sheet, surely?Employers will also have ammunition to ask for a bigger cut.
Dear Neighbour,
As a powerfully-built managing director of 2 (two) companies, I demand that you stop parking your MPV by the kerb outside my house. I did not pay £800,000 to have to wake up to see your ugly Renault every morning.
Kind regards,
Mr Hoofy MBA, BSc (Hons), CEO
Dear Mr Hoofy,
According to Companies House, your 2 (two) companies are worth £1 each and according to the Highway Code I am free to park outside your house as there are no official markings or signs to suggest otherwise.
Kind regards,
Neighbour
As a powerfully-built managing director of 2 (two) companies, I demand that you stop parking your MPV by the kerb outside my house. I did not pay £800,000 to have to wake up to see your ugly Renault every morning.
Kind regards,
Mr Hoofy MBA, BSc (Hons), CEO
Dear Mr Hoofy,
According to Companies House, your 2 (two) companies are worth £1 each and according to the Highway Code I am free to park outside your house as there are no official markings or signs to suggest otherwise.
Kind regards,
Neighbour
Hoofy said:
Thanks. I always thought it was how it was. Didn't know it had changed.
I’ve been working in preparing limited company accounts since 1976 ( and UK limited company accounts since 1986) so have seen massive changes in corporate governance and disclosure requirements o er almost five decades.At one point ALL limited companies had to undergo formal audits too. That was abolished almost 40 years ago. Pray that they don’t bring that requirement back,
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