Changes to Companies House rules that would have axed an exemption allowing smaller businesses to file abbreviated accounts have been delayed amid concerns they could burden them with more red tape.
Legislation brought in by the previous Conservative administration is due to compel companies with a turnover under £10.2m, balance sheets under £5.1m and fewer than 50 employees to disclose more detail in their annual accounts from April 2027.
However, the business secretary, Jonathan Reynolds, is understood to be have reversed the move to reduce regulatory hurdles for small firms. A government source said: “We have paused them, Jonny is worried it’s too burdensome”.
Last month the government unveiled its industrial strategy in which it said it aims to “reduce regulatory burdens and speed innovation [by] cutting the administrative costs of regulation for business by 25%”.
The proposals to make companies publish more comprehensive financial information were designed to remove longstanding exemptions that allowed small firms to file “abridged accounts” and counter criticisms that the more relaxed rules for qualifying businesses had enabled fraud.
The intention had been that small companies would be required to use a set format to electronically file a profit and loss statement, which would be able to be viewed by the public and would include information such as turnover and costs.
Business groups had criticised the move saying that small companies would be forced to pay to use expensive computer software to meet the new regulations. However, Companies House had said the measures, which were set out in the Economic Crime and Corporate Transparency Act, would “be a critical step towards improving the quality of the data on the register”.
Companies House has long faced criticism of how it polices the information that it holds. In April it emerged that the agency had collected just £1,250 in fines after being given new powers to crack down on corruption.
A spokesperson for the Department for Business and Trade said: “This government is committed to avoiding undue burdens on businesses as part of our plan for change.”