Going back to Sole Trader? Companies House removing abridged accounts

[potato632]

2 days ago a date was announced: https://changestoukcompanylaw.campaign.gov.uk/changes-to-accounts/

Changes to small company filing options​

From 1 April 2027, we’re also streamlining the accounts filing options for small and micro-entity companies.


Micro-entities will be required to file a copy of their balance sheet and profit and loss account.


Small companies will be required to file a copy of balance sheet, directors’ report, auditor’s report (unless exempt) and profit and loss account.


Companies will no longer be able to prepare and file ‘abridged’ accounts.

Due to these upcoming changes we will no longer be able to file abridged/filleted accounts for micro-entities (or any other), resulting in zero financial privacy

This is not a problem for large companies, but for 1 director/employee it means all of our personal (and business) earnings/income is viewable by any random member of public, friends, family, criminals, everyone!

If you're looking for romance, now they can check out your income before agreeing to a date And of course AI/data gathering companies are going to get a REALLY accurate financial picture of you

It's bad enough having our personal names and sometimes addresses available for identity theft (people can hunt down our VAT addresses too!)

There are of course other downsides of having full profit and loss accounts available to the public as a micro-entity or small business, for example:

Competing companies will be able to see your entire card of hands and adjust prices accordingly to force you into bankruptcy
Clients can refuse business if they see your books aren't looking healthy or if you are making too much of a profit
Lots of legitimate reasons that once protected small companies from the bigger ones



I originally setup a LTD company for the tax benefits which are now almost non-existent vs sole-trader and now there is no privacy. For me there is no real benefit to trade as a LTD company

So for that reason I am most likely going back to sole trader, it's a massive pain in the backside winding down my company, dealing with MVL, BADR, selling assets and hiring liquidators but i'm left with no choice if I want to maintain financial privacy from the public


Is anyone else considering the same thing?

 

[Mark T Jones]

Your conclusion is correct

If you want to be (somewhat) invisible, sole trader or Ltd is the way to go - with the financial risk it entails

If you want the security of limited liability, then you have to reveal information

 

[fisicx]

On the other hand, the changes mean huge numbers of dodgy businesses (including lots of money laundering) will now be transparent.

Just change from LL to full Ltd and carry on as before.

 

[paulears]

Surely, the above posts are the exact point. When anyone trades with a LL they taker a risk, and company house data hides the truth. THEY get liability protection if it goes wrong, the customer takes the risk. I have chosen not to do business with people I am not certain about, but have given business to ones who have their data available. As the choice of sole trader against the other versions is a business decision, surely you choose the best one?

 

[potato632]

On the other hand, the changes mean huge numbers of dodgy businesses (including lots of money laundering) will now be transparent.

Full profit and loss accounts have always been available to HMRC, it would have been better to fund HMRC more in order to crack down on dodgy businesses instead of removing all privacy from micro-entities imo

It's obvious Companies House was lacking massively in places like ID checks but they went too far by forcing full public profit and loss accounts for everyone

Just change from LL to full Ltd and carry on as before.

What does this mean?

 

[jack52]

I mean... its not a big deal with pnl being public

Its no different than every civil servant, directors of public companies and given someones name / job title / company they work at you can easily estimate salary to within 25% of the true value.

Similarly, If you gave me your website / name of business I am confident I could estimate your 'profit' within 25% of the true value.

Competing companies will be able to see your entire card of hands and adjust prices accordingly to force you into bankruptcy

i think thats a bit of an exaggeration...

 

[fisicx]

Difference between the two:

LLC vs LTD Company: What are the Differences?

Choosing between a Limited Liability Company (LLC) and a Limited Company (Ltd) can significantly impact your legal structure, tax obligations, and liability exposure. While both offer a degree of protection to their owners, they differ in key aspects that can have profound implications for your...

incorpuk.com

It’s not about funding, it’s about LLC was used as cover for money laundering and other iffy activities.

 

[Deleted member 367548]

I see it from both side on this one. It has become a huge issue with dodgy businesses and even businesses operating under other people's names so I guess this could help. But I agree it means potential people you work with will see everything or even people in your personal life, which feels a big step back on privacy.

I do think limited is still the way to go as I think, as others have said, it limits your liability whereas a sole trader takes a lot of risk with them

 

[fisicx]

As a limited company there is lots you can do to keep your personal details private and even full accounts give little away as to how you run your business.

Agreed there are a few more things need filing each year but it’s all pretty straight forward @potato632

 

[potato632]

I see it from both side on this one. It has become a huge issue with dodgy businesses and even businesses operating under other people's names so I guess this could help. But I agree it means potential people you work with will see everything or even people in your personal life, which feels a big step back on privacy.

But isn't this something that can be solved simply by funding HMRC inspectors? They already have full profit and loss accounts filed, they're just not publicly viewable

As a limited company there is lots you can do to keep your personal details private and even full accounts give little away as to how you run your business.

Full profit and loss accounts with a 1 director/employee company hold no secrets

I think we're waiting on secondary legislation to specify exactly what will be public, but it's way more than I feel is necessary

 

[fisicx]

But isn't this something that can be solved simply by funding HMRC inspectors?

No. Because it’s a company house thing not HMRC.

Full profit and loss doesn’t mean lots of detail. Mine just shows earnings and costs. There is zero detail about how I earned that money - just says IT services.

I think you are being over cautious. Nobody is going to force you into bankruptcy because you publish your accounts.

 

[potato632]

No. Because it’s a company house thing not HMRC.

Full profit and loss doesn’t mean lots of detail. Mine just shows earnings and costs. There is zero detail about how I earned that money - just says IT services.

I think you are being over cautious. Nobody is going to force you into bankruptcy because you publish your accounts.

I'm not seeing the benefit of public full profit and loss accounts, if HMRC wants to crack down on fraud or anything, there is no difference to them between publicly displaying and not

For me it's not a concern of business competition - I just don't like my personal finances being on public display - we don't live in a country that has an open system like that and it opens me up to being targeted by criminals where I would otherwise not be, that and nosey people I may or may not know

 

[Mark T Jones]

I'm not seeing the benefit of public full profit and loss accounts, if HMRC wants to crack down on fraud or anything, there is no difference to them between publicly displaying and not

For me it's not a concern of business competition - I just don't like my personal finances being on public display - we don't live in a country that has an open system like that and it opens me up to being targeted by criminals where I would otherwise not be, that and nosey people I may or may not know

It's not your personal finances, it's company finances.

 

[potato632]

It's not your personal finances, it's company finances.

Yeah but I am a single director/employee so any money taken out is going to me whether it's salary, dividends, pension..

 

[fisicx]

Yeah but I am a single director/employee so any money taken out is going to me whether it's salary, dividends, pension..

Have you looked a set of accounts? For a small business they are pretty anonymous. And your suggestion that someone could use the information to bankrupt you isn’t viable.

 

[Mark T Jones]

Yeah but I am a single director/employee so any money taken out is going to me whether it's salary, dividends, pension..

TBH, I'd say get over yourself. Nothing will change and nobody will care

More precisely, they'll be all over it fir the first year, making wild and stupid assumptions on the back of virtually no information, then they'll completely lose interest.

 

[Michael Loveridge]

As someone who assists clients to recover money from reluctant customers I think it's an excellent development, and it's something I've been pushing CH to implement for years.

The minimum accounts that are available at present are virtually useless for credit assessment, as they often show a company to be balance sheet insolvent, even though they may be earning a decent profit. I therefore have to advise my client that they are at serious risk of throwing good money after bad, whereas if I can see the company is actually making a decent profit there's every likelihood they will want to carry on doing so, and would therefore rather pay the debt than be forced into liquidation.

Bring it on!

 

[potato632]

Have you looked a set of accounts? For a small business they are pretty anonymous. And your suggestion that someone could use the information to bankrupt you isn’t viable.

I have looked at my full profit and loss accounts and compared them vs my abridged, the difference is night-and-day

I'm not concerned about becoming bankrupt, I just want privacy that exists with abridged accounts

The minimum accounts that are available at present are virtually useless for credit assessment, as they often show a company to be balance sheet insolvent, even though they may be earning a decent profit. I therefore have to advise my client that they are at serious risk of throwing good money after bad, whereas if I can see the company is actually making a decent profit there's every likelihood they will want to carry on doing so, and would therefore rather pay the debt than be forced into liquidation.

There's nothing stopping people or businesses requesting full profit and loss accounts before signing a contract with a company, in fact it's silly not to in order to reduce risk for big sales/contracts

 

[Michael Loveridge]

I have looked at my full profit and loss accounts and compared them vs my abridged, the difference is night-and-day

I'm not concerned about becoming bankrupt, I just want privacy that exists with abridged accounts



There's nothing stopping people or businesses requesting full profit and loss accounts before signing a contract with a company, in fact it's silly not to in order to reduce risk for big sales/contracts

I quite agree, but unfortunately I'm dealing with situations where the debt has already arisen, at which point it's rather unlikely that the debtor company would be happy to provide these!

 

[fisicx]

I'm not concerned about becoming bankrupt, I just want privacy that exists with abridged accounts.

Yes but because of the corruption endemic with LLC this has now been rescinded. You may feel aggrieved but that’s just how things are.

Consider also your full accounts may contain too much detail.

 

[Newchodge]

Well, it looks as if it isn't going to happen.

Labour: the best friend business opacity has got

As the FT has reported this morning: Ministers are set to shelve reforms to Companies House that would have required businesses to file their accounts in a more onerous way as part of the government’s attempt to reduce red tape on UK plc. They added Under legislation brought in by the previous...

www.taxresearch.org.uk

 

[Mark T Jones]

Well, it looks as if it isn't going to happen.

Labour: the best friend business opacity has got

As the FT has reported this morning: Ministers are set to shelve reforms to Companies House that would have required businesses to file their accounts in a more onerous way as part of the government’s attempt to reduce red tape on UK plc. They added Under legislation brought in by the previous...

www.taxresearch.org.uk

This man is 100% committed to turning...

 

[Michael Loveridge]

Well, it looks as if it isn't going to happen.

Labour: the best friend business opacity has got

As the FT has reported this morning: Ministers are set to shelve reforms to Companies House that would have required businesses to file their accounts in a more onerous way as part of the government’s attempt to reduce red tape on UK plc. They added Under legislation brought in by the previous...

www.taxresearch.org.uk

This government is a bloody disgrace! Everything they say is completely unreliable, and likely to be changed on a whim, depending on which direction the wind is blowing.

On the one hand they are now, supposedly in the interests of `getting rid of red tape', proposing to remove a sensible amendment that would have vastly improved transparency and been of benefit to many people, while on the other hand they are introducing employment legislation that will cause massive harm to all employers, and particularly small ones, by drowning them in regulation and red tape.

They're a complete shambles, and they're making the UK a laughing stock on the international arena.

 

[Newchodge]

Perhaps you should mention this to your MP?

 

[Michael Loveridge]

Perhaps you should mention this to your MP?

I've written to him today, but I'm not holding my breath, as he's a party hack, and will do as he's told.

 

[potato632]

Well, it looks as if it isn't going to happen.

Labour: the best friend business opacity has got

As the FT has reported this morning: Ministers are set to shelve reforms to Companies House that would have required businesses to file their accounts in a more onerous way as part of the government’s attempt to reduce red tape on UK plc. They added Under legislation brought in by the previous...

www.taxresearch.org.uk

Wow that's a surprise

If Companies House confirms it, i'll be glad they are not going ahead with public full profit and loss accounts but it's a joke if they are also dropping software filing requirements & paper filing ban under the guise of "reducing red-tape"

Owning a LTD company should mean there is red-tape to combat fraud!

 

[Newchodge]

Wow that's a surprise

If Companies House confirms it, i'll be glad they are not going ahead with public full profit and loss accounts but it's a joke if they are also dropping software filing requirements & paper filing ban under the guise of "reducing red-tape"

Owning a LTD company should mean there is red-tape to combat fraud!

It is not Companies House's choice. This is a deciusion made by the government.

 

[fisicx]

Owning a LTD company should mean there is red-tape to combat fraud!

So should owning a LLC - where fraud is rampant.