Companies House reforms: the compliance bar keeps rising June 11, 2026 Kieron McGahan Post in Uncategorized Companies House reforms: the compliance bar keeps rising Companies House announced this week that from April 2028, all small and micro companies will be required to file full profit and loss accounts for the first time. Alongside that, all filings will need to be made using commercial software capable of producing iXBRL output — ending the option of shortened or abridged accounts. The changes stem from the 2023 Economic Crime and Corporate Transparency Act, and they come with an important reversal: the previous business secretary had explicitly committed to dropping them. The Federation of Small Businesses has pushed back, arguing the reforms make it more expensive and complex to run a small company. The ICAEW has flagged that iXBRL compliance will add cost for businesses not currently set up for it. Both are making a reasonable point — about a specific group of businesses. Because for a small company already using cloud accounting software and working with an accountant who treats compliance as the starting point, the practical change is close to nil. iXBRL output is already standard in any modern accountancy practice. The P&L is already there. The incremental burden of the new requirement, for a business with the right foundations in place, is negligible. The cost argument is real — but it is an argument about businesses trying to manage this alone, or with arrangements that were never designed for it. It is not a strong argument against the reforms themselves. MTD set the same pattern Making Tax Digital for Income Tax followed exactly the same arc. The conversation leading up to April 2026 was dominated by the burden — quarterly submissions, software costs, disruption to existing routines. And for sole traders scrambling to adapt from a standing start, that was a fair concern. But for those who got properly set up, something else happened. A connected bank feed and invoices running through the software gave a live view of income building through the year — something most hadn’t had before. Monitoring the VAT registration threshold at £90,000 became straightforward rather than something easy to miss when you’re busy. And if and when a business did cross it, the step up to VAT MTD was smaller than it looked: the same software, a few configuration changes, with record keeping and invoicing already in the right shape. MTD forced the issue. The end state was better than where most people started. The Companies House changes will follow the same pattern. A properly kept P&L, filed in a structured, machine-readable format, is not a significant extra burden when the bookkeeping is already set up to support it throughout the year. When it isn’t, the cost goes up — not because of the reform, but because the underlying process wasn’t working. The gap compliance keeps exposing There is a common situation among small companies: compliance is covered, accounts are filed on time, tax returns submitted. But the same habits and processes that keep the books compliant could, by default, give the business a clear and current picture of where it stands financially — if they were running throughout the year rather than being assembled at year end. That step is often left until filing is due, by which point the information has lost most of its relevance to actually running the business. Each new compliance requirement — MTD, Companies House, whatever follows — is effectively closing that gap by compulsion. The businesses that treat each change as a foundation to build on end up with books that work. The ones that absorb each change as a minimum requirement end up doing the same work repeatedly, at year-end pressure, without the benefit. Where software and AI come in There is a longer-run point here that the compliance debate tends to miss entirely. Mandated, structured financial data flowing through standardised software is exactly the territory that SaaS tools and AI are moving into fast. iXBRL-formatted accounts, bank feeds, categorised transactions, quarterly submission data — this is the kind of clean, consistent input that automation handles well. The gap between “accounts filed” and “books that actually tell you something useful” is going to close — not because businesses suddenly decide to close it, but because the tooling will make it close to automatic. That is broadly a good thing. But it does mean that the businesses which have built the habits and infrastructure now will have had the advantage during the transition period. The ones that haven’t will find the change being done to them rather than by them — and will be catching up rather than getting ahead. The compliance requirements are the forcing function. The software takes care of more of the execution with each passing year. The question is whether the business has the foundations in place to benefit from that, or whether each new requirement lands as a disruption. What to do now April 2028 is not imminent, and the structural changes to how you run your books do not need to happen overnight. But there are a few practical things worth checking: Are you using cloud accounting software that an accountant can work with directly? The main platforms — Xero, FreeAgent, QuickBooks — all produce iXBRL-compliant output as a matter of course. Is your bank feed connected and current? A live, reconciled bank feed is the single most useful piece of infrastructure for any small business. It is also the foundation of everything else. Is your P&L something you look at during the year, or something your accountant produces at year end? If it is the latter, the new requirements give a good reason to change that. Are you set up to opt out of public disclosure? The P&L has to be filed either way — the choice is whether it appears on the public register. Worth confirming with your accountant. If any of this prompts a broader review of how your accounts are currently set up, get in touch. The first conversation is free.
Companies House reforms: the compliance bar keeps rising Companies House announced this week that from April 2028, all small and micro companies will be required to file full profit and loss accounts for the first time. Alongside that, all filings will need to be made using commercial software capable of producing iXBRL output — ending the option of shortened or abridged accounts. The changes stem from the 2023 Economic Crime and Corporate Transparency Act, and they come with an important reversal: the previous business secretary had explicitly committed to dropping them. The Federation of Small Businesses has pushed back, arguing the reforms make it more expensive and complex to run a small company. The ICAEW has flagged that iXBRL compliance will add cost for businesses not currently set up for it. Both are making a reasonable point — about a specific group of businesses. Because for a small company already using cloud accounting software and working with an accountant who treats compliance as the starting point, the practical change is close to nil. iXBRL output is already standard in any modern accountancy practice. The P&L is already there. The incremental burden of the new requirement, for a business with the right foundations in place, is negligible. The cost argument is real — but it is an argument about businesses trying to manage this alone, or with arrangements that were never designed for it. It is not a strong argument against the reforms themselves. MTD set the same pattern Making Tax Digital for Income Tax followed exactly the same arc. The conversation leading up to April 2026 was dominated by the burden — quarterly submissions, software costs, disruption to existing routines. And for sole traders scrambling to adapt from a standing start, that was a fair concern. But for those who got properly set up, something else happened. A connected bank feed and invoices running through the software gave a live view of income building through the year — something most hadn’t had before. Monitoring the VAT registration threshold at £90,000 became straightforward rather than something easy to miss when you’re busy. And if and when a business did cross it, the step up to VAT MTD was smaller than it looked: the same software, a few configuration changes, with record keeping and invoicing already in the right shape. MTD forced the issue. The end state was better than where most people started. The Companies House changes will follow the same pattern. A properly kept P&L, filed in a structured, machine-readable format, is not a significant extra burden when the bookkeeping is already set up to support it throughout the year. When it isn’t, the cost goes up — not because of the reform, but because the underlying process wasn’t working. The gap compliance keeps exposing There is a common situation among small companies: compliance is covered, accounts are filed on time, tax returns submitted. But the same habits and processes that keep the books compliant could, by default, give the business a clear and current picture of where it stands financially — if they were running throughout the year rather than being assembled at year end. That step is often left until filing is due, by which point the information has lost most of its relevance to actually running the business. Each new compliance requirement — MTD, Companies House, whatever follows — is effectively closing that gap by compulsion. The businesses that treat each change as a foundation to build on end up with books that work. The ones that absorb each change as a minimum requirement end up doing the same work repeatedly, at year-end pressure, without the benefit. Where software and AI come in There is a longer-run point here that the compliance debate tends to miss entirely. Mandated, structured financial data flowing through standardised software is exactly the territory that SaaS tools and AI are moving into fast. iXBRL-formatted accounts, bank feeds, categorised transactions, quarterly submission data — this is the kind of clean, consistent input that automation handles well. The gap between “accounts filed” and “books that actually tell you something useful” is going to close — not because businesses suddenly decide to close it, but because the tooling will make it close to automatic. That is broadly a good thing. But it does mean that the businesses which have built the habits and infrastructure now will have had the advantage during the transition period. The ones that haven’t will find the change being done to them rather than by them — and will be catching up rather than getting ahead. The compliance requirements are the forcing function. The software takes care of more of the execution with each passing year. The question is whether the business has the foundations in place to benefit from that, or whether each new requirement lands as a disruption. What to do now April 2028 is not imminent, and the structural changes to how you run your books do not need to happen overnight. But there are a few practical things worth checking: Are you using cloud accounting software that an accountant can work with directly? The main platforms — Xero, FreeAgent, QuickBooks — all produce iXBRL-compliant output as a matter of course. Is your bank feed connected and current? A live, reconciled bank feed is the single most useful piece of infrastructure for any small business. It is also the foundation of everything else. Is your P&L something you look at during the year, or something your accountant produces at year end? If it is the latter, the new requirements give a good reason to change that. Are you set up to opt out of public disclosure? The P&L has to be filed either way — the choice is whether it appears on the public register. Worth confirming with your accountant. If any of this prompts a broader review of how your accounts are currently set up, get in touch. The first conversation is free.