Government pauses requirement for small-company P&L filing

On 23 October 2026 the Government paused the requirement for small companies and micro-entities to file a profit and loss account at Companies House.  For anyone buying, selling or financing a private company, the status quo continues and two basic datapoints stay off the public record: how much smaller companies make in sales and whether they make any money after deducting the costs.

That is a loss for buyers and lenders looking to price deals and risk, but also a relief for owners, founders and their investors wanting privacy.

Government steps back again

The Economic Crime and Corporate Transparency Act 2023 legislated to end ‘filleting’, the option for a small company to file its balance sheet without its profit and loss account, and to remove abridged accounts.  It also gave the Secretary of State power to keep small companies’ profit and loss accounts off the public register.[1]

In June 2026 the Government said that, from April 2028, small companies and micro-entities would file profit and loss accounts but could opt out of publication.[2]

On 23 October the Government went further.  Following the Small Business Regulatory Taskforce’s recommendations, it paused the filing requirement itself.  In effect, it wants to sort out the plumbing first, so that a company gives Companies House and HMRC the same information only once (‘Tell Government Once’).  Smaller companies can still file abridged or filleted accounts after 1 April 2028.[3]

A balance sheet only tells you so much

Filleted accounts show assets, liabilities and net assets, but not turnover or profit, so they cannot show whether a business is growing or profitable.  Two companies with similar balance sheets might each turn over £10 million, one making £1 million of earnings before interest, tax, depreciation and amortisation (EBITDA) and the other nothing. The register cannot tell a buyer looking for £1 million of EBITDA which is worth a call because companies are not required to make that known in the accounts they publish.

In 2023 Companies House said thin small-company filings made creditworthiness hard for lenders and creditors to judge.[4]  It did not mention buyers or investors, who face the same problem when looking to price equity values.

By June 2026 the Government accepted that publishing could improve access to finance, but left publication to each company.[5]  In October it said there was “enormous value” in Companies House having profit and loss accounts for all companies, giving economic crime as the reason.[6]  The earlier points about lenders, creditors and access to finance were not repeated.

Why this matters when companies are bought and sold

Take a private equity-backed buy-and-build platform in, say, IT managed services, with perhaps a thousand possible UK targets.  Today it screens them through paid databases, brokers and advisors’ networks, infers turnover from headcount and approaches companies before knowing whether they are remotely within range.  A buyer working blind wastes approaches on companies that turn out to be too small or unprofitable, and never approaches good targets that the databases miss.

That friction sits before due diligence, when buyers, sellers and their advisors have to find each other to start making a deal.  Public turnover and profit figures would speed up that matchmaking: a buyer could rule out the wrong targets quickly and approach the right ones better informed.

More buyers finding more sellers should mean more conversations, more competitive sale processes and more transactions.  A study in 2023 of 40,321 private-company acquisitions completed between 2001 and 2012 in 12 European countries, including the UK, found that more private companies were acquired where more of them had to publish fuller sets of accounts, and the study attributed this to acquirers being able to screen and value targets more easily.[7]  However, the effect was modest, the study pools the UK with 11 other countries, and the companies required to publish were above the small-company thresholds.

No box to lock

UK M&A has to an extent coalesced around the ‘locked box’ pricing mechanism, in preference to a post-completion accounts adjustment.  A locked box gives price certainty and, in theory, a quicker deal with lower levels of professional costs incurred than a completion accounts deal.

But a locked box needs reliable accounts at the locked box date, and on many mid-market deals there is no box to lock: historic profitability is often poorly understood and the last accounts prepared by third-party accountants are too out of date, so the parties fall back on completion accounts.

Annual publication of a P&L could make owners focus on profitability long before a sale and make locked box accounts easier to produce.  That would help them, since quicker M&A means quicker liquidity, and would let buyers compare like with like sooner.

What a filed profit and loss account would not do

None of this replaces due diligence, of course.  Statutory accounts are historic: a private company has nine months after its year end to file them.[8]  They say nothing about current trading, customer concentration, quality of earnings, working capital, debt-like items, forecasts or tax exposures.  A public profit and loss account would improve discovery and first-stage screening.  It would not tell anyone what to pay for a company’s share capital.

Transparency has a price

Turnover and margins are commercially sensitive, and competitors, customers, suppliers and employees can all use them.  For many owner-managers, publishing a profit and loss account would feel much like publishing their pay slip.

Early-stage technology companies are often heavily loss-making, and their founders and venture investors may not want competitors, customers or prospective hires to see just how much.

A study of UK private companies (albeit a long time ago in 2009) found that private companies faced with  more competition, and more profitable competitors, were likelier to withhold sales and cost of sales when allowed to.[9]  In June the Government recorded concerns from business and investors about commercial risk and investment opportunities.[10]

But opacity has a price too

The same research shows the other side: the most profitable businesses are more likely to want to hide their numbers from public view, but they are the businesses buyers in most interested in finding.

Publication as a price of incorporated status?

Announcing the pause, the Government called the confirmation statement fee companies’ annual contribution towards the benefits of incorporated status, including limited liability, which it put at around £9.6 billion for companies with up to nine employees.[11]  Companies already put their ownership, officers, charges and balance sheet on the register in return.  There is a respectable argument that a minimum of useful financial information should form part of that bargain.  Limited liability is, of course, a statutory privilege.

A middle ground?

That minimum set of information need not be the full profit and loss account.  The better compromise would perhaps have been mandatory filing, with turnover and profit before tax published as standard and a narrow exemption for genuinely sensitive cases.

Those two figures would reveal a pre-tax margin, but not gross margin, the cost base or EBITDA.  The 2023 Act’s enabling power could deliver this once filing is commenced.[12]

The M&A case is strongest at the top of the small-company range, which now reaches £15 million of turnover.[13]  Micro-entities are different: for a one-person company, published profit is close to being a statement of the owner’s income, and a lighter default, such as turnover alone, would be proportionate.

A strange direction of travel

The Government is pressing ahead with mandatory filing in iXBRL (inline eXtensible Business Reporting Language), which tags the figures in the accounts so that software can read them.  In Companies House’s words, this creates “more opportunities over time for companies’ accounts data to be aggregated, compared and analysed”.[14]  For companies that fillet, the figures most worth analysing will stay out of that data.

Elsewhere, the Government is considering a solvency test for dividends, as we discussed in our recent Insight, Replacing distributable profits with a solvency test.  The two initiatives are separate, but if the aim is a more dynamic private-company economy, simpler company law and better company information should go together.

What the pause leaves open

The Taskforce asked for the requirement to be reversed because small companies already give HMRC the same information.[15]  Its concern was the burden of filing twice, which a single submission received by both Companies House and HMRC would address. It did not argue against publication as such.

Routing the figures from HMRC instead, as the Taskforce suggested, would need a lawful gateway past HMRC’s duty of confidentiality.[16]  Publication is a separate question.  These companies already prepare a profit and loss account for their members,[17] so publishing headline figures would add little work. The real cost to owners is privacy.

The requirement has been paused rather than repealed.  If the Government builds a single filing, it will have the chance to decide whether the basics should be published, and on what terms.

This Insight was written by Henry Humphreys and Sian Angus.  If you have any questions about the pause, or any of the matters referred to above, please do reach out to a member of the team at HLaw.

All the thoughts and commentary that HLaw publishes on this website, including those set out above, are subject to the terms and conditions of use of this website.  None of the above constitutes legal advice and is not to be relied upon.  Much of the above will no doubt fall out of date and conflict with future law and practice one day.  None of the above should be relied upon.  Always seek your own independent professional advice.

Humphreys Law

[1] Economic Crime and Corporate Transparency Act 2023, ss 53, 54, 56 and 58.  Section 56 inserts s 468A into the Companies Act 2006.  Under the current s 444(1) of the 2006 Act, a small company must file its balance sheet and may choose whether to file its profit and loss account.  Apart from the regulation-making powers, these provisions are not in force.

[2] Written Ministerial Statement HCWS94, Companies House Accounts Reforms, 9 June 2026; Companies House, Companies House to bring in changes to accounts filing from April 2028, 9 June 2026.  Companies House, HMRC and law enforcement would still have had access to accounts kept off the register.

[3] Companies House, Companies House update to accounts filing from April 2028, 23 October 2026; Written Ministerial Statement HLWS419, Small Business Regulatory Taskforce: Government Response, 23 October 2026.  Software-only filing in iXBRL goes ahead from April 2028, as do a strengthened eligibility statement for companies claiming audit exemption, a requirement to file the component parts of accounts and reports together and a limit on how often a company can shorten its accounting reference period.

[4] Companies House, Changes to accounts, part 2: small company filing options, 10 February 2023.

[5] HCWS94 (n 2).

[6] Reducing the Regulatory Burden for Small Business: Government response to the Small Business Regulatory Taskforce report (October 2026), response to recommendation 1a.

[7] M Ortiz, C D Peter, F Urzúa I. and P F Volpin, ‘Mandatory Financial Disclosure and M&A Activity’ (2023) 36(12) Review of Financial Studies 4788.  The study covers completed acquisitions of private targets in 12 European countries from 2001 to 2012.  Its main measure is the share of private companies in each country, industry and year required to publish fuller accounts, generally those above national small-company thresholds.  It reports no separate estimate for the UK.

[8] Companies Act 2006, s 442(2)(a).

[9] E Dedman and C Lennox, ‘Perceived competition, profitability and the withholding of information about sales and the cost of sales’ (2009) 48 Journal of Accounting and Economics 210.  The study concerned UK manufacturing companies that could file abbreviated accounts under the rules then in force.

[10] HCWS94 (n 2).

[11] HLWS419 (n 3).

[12] Companies Act 2006, s 468A(1) and (2), inserted by the Economic Crime and Corporate Transparency Act 2023, s 56.  Regulations may require the registrar, on application or otherwise, not to make profit and loss accounts, or parts of them, available for public inspection.  On commencement, see n 1.

[13] Companies Act 2006, s 382(3) and s 384A(4), as amended for financial years beginning on or after 6 April 2025 by the Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024, SI 2024/1303.  A company is small if it meets at least two of: turnover not more than £15 million, balance sheet total not more than £7.5 million and not more than 50 employees.  The micro-entity limits are £1 million, £500,000 and ten employees, on the same two-of-three basis.  Other conditions and exclusions apply.

[14] Companies House, 23 October 2026 (n 3).  The 9 June 2026 announcement (n 2) uses the same words.

[15] Small Business Regulatory Taskforce, report (published 23 October 2026), recommendation 1a; Government response (n 6).

[16] Commissioners for Revenue and Customs Act 2005, s 18(1).  Disclosure is permitted in limited cases, including with the consent of each person to whom the information relates (s 18(2)(h)) or where another enactment permits it (s 18(3)).

[17] Companies Act 2006, s 396(1) (individual accounts comprise a balance sheet and a profit and loss account) and s 423(1) (copies to every member).  Micro-entities prepare a simplified profit and loss account.