The UK government has just passed the Economic Crime and Corporate Transparency Bill which aims to reform the role of Companies House. The Bill intends to improve transparency over UK companies, thereby helping to strengthen the UK’s business environment and to combat economic crime. In turn, more reliable companies will register to underpin business activity. It is vital for those who work with financial reporting to understand the impact that this bill will have.
With Companies House having more authority over their submissions, they will move towards digital submissions for annual accounts, thereby removing the paper filing option. So, what does this mean? Companies will have to submit their accounts in inline eXtensible Business Reporting Language (iXBRL) format. This is not a new concept in the UK; iXBRL was first introduced in 2009 by HMRC for statutory reports, and more recently by the ESEF mandate for main-market listed companies for submissions to the FCA. However, the expected change from Companies House will change the status quo.
How does the Economic Crime and Corporate Transparency Act affect me?
Firstly, not all companies in the UK are currently in scope of the HMRC or ESEF iXBRL mandate. As a result, millions of companies across the UK will now have to comply with an iXBRL mandate for the first time. The mandate will also impact groups that have subsidiaries which have previously been exempt or have not met the requirements for iXBRL reporting. Many of these companies will not be familiar with iXBRL tagging or tagging software in general. Moreover, these accounts will be in the public domain, thus it is increasingly important that they are produced accurately. To reduce the time/resource burden, companies should consider using an experienced provider.
Secondly, it is expected that businesses will still have to comply with the 9-month filing deadline for submission to Companies House, which will impact all businesses. For those who are new to an iXBRL mandate, this will have to be worked into their timetable for the first time. Similarly, for those who currently submit iXBRL to HMRC and have built timetables and processes around a 12-month submission deadline, iXBRL reporting will now have to be brought back by 3 months to comply with the Companies House deadline.
However, even with the complexities and the change to reporting timetables, this should be embraced as a positive step forward for Companies House. Digital submission means that reports will be more accessible, and all the work that is put in to creating a set of annual accounts will be digestible at the click of a button. It will also result in closer real time publication of accounts as they no longer must be manually scanned and published. In addition, and most importantly, the reams of paper accounts that are submitted to Companies House on an annual basis will no longer be necessary. With ESG now at the forefront of many things we do personally and professionally, it is encouraging to see Companies House taking such a significant step.
How can I prepare to adapt to these changes?
As always with new mandates, we find those who prepare early have a much more seamless transition, and we are here to help. ARKK have been in the world of iXBRL reporting for over 14 years and tag over 6,000 accounts on an annual basis, working with over 65% of the FTSE. We understand the challenge that many will face many with this new requirement, and our UK based iXBRL team are here to support and work with you to find the best solution to suit your needs. With years of experience, our team are here to assist with the tagging of your report, in line with the regulatory requirements but also considering best practices. They can also liaise with your team and relevant third parties on any queries you have when reviewing the tagged report. Further to that, our team will provide guidance on submission and assistance on any issues that may occur whilst submitting.
With the Economic Crime and Corporate Transparency Bill driving the transition to digital reporting at Companies House, ARKK emerges as the go-to provider of iXBRL tagging solutions. With extensive experience and a proven track record, we are ready to support your transition in this transformative era of financial reporting. Trust ARKK for precision, accuracy, and a transparent future for your financial reporting needs.