The implications of Companies House fee increases for your clients

Accountants explain how the Companies House fee increases will affect their practices and clients.

Significant reforms to Companies House are currently underway to clamp down on fraud and economic crime and improve transparency. As part of these reforms, Companies House has been granted greater powers to investigate and act on any suspicious company information, and there are now stricter requirements for companies when filing information.

The first round of changes came into force in March. Future reforms with implementation dates yet to be announced include:

• A requirement for businesses to file digital accounts rather than paper ones – the software-only roll-out will take place over 2-3 years.
• A requirement for small and micro entities to file profit and loss accounts as well as a directors’ report.

From 1 May 2024, Companies House will significantly increase its fees. As part of the move towards digitalisation, fees for paper filing will be more expensive digital filing.

Given the huge increase and the extent of the changes to Companies House overall, accountants have a lot to absorb and incorporate when it comes to client communications and pricing structures.

We spoke to several accountants to see how they’re preparing for all these changes, not least the fee increase – and what it might mean for them and their clients.

Companies will need to use accountants more

Morgan Davies, Director, Prime Accountants Group

Companies House has significantly increased its fees for a lot of things and we’re having to pass those costs on to the client in some instances.

However, the increases are generally for things which are designed to be infrequent. For example, a change of company name or a business closure. So while the cost has gone up a lot as a percentage, for most businesses, the costs are fairly trivial.

For example, some items which once cost £8 have gone up to £40. But on the flip side, some costs have come down, e.g a filing charge is £24 to submit on paper and £15 to submit digitally.

From a professional services point of view, the move towards digital won’t impact us as a company, as we got rid of paper filing a long time ago. Many accountants will have already invested in the software needed.

But one significant change from the reforms is around ID checks. Toughening up on this helps create a better environment for companies to do business, as it creates more confidence in the system.

The downside for companies is they are more likely to have to use an accountant for things they previously had the flexibility to do themselves.

Verdict: Companies will have to use an accountant for things they could previously handle themselves.

We’ve increased our fees and are running social media campaigns

Zahid Mustafa, Founder and Director, Erdingsworth Business and Tax Advisors

We’re advising clients of the Companies House changes and what it means for them. This process takes a significant amount of time, but as our clients must be fully up to date, we’ve dedicated an entire social media campaign to raising awareness.

The increase in Companies House fees has resulted in us increasing our fees. We have advised our clients in good time about this to ensure that there are no issues for them and it can be incorporated into their cash flow forecasts.

On the digital side, we’ve already adopted a digital policy well before the changes, so we’re well prepared.

In fact, we would encourage more “digitisation” as it is easy, quicker and reliable. We also use cloud-based software for accounts preparation and filing.

Overall, we welcome the new reforms. They mean greater transparency and therefore, information held by Companies House will be more reliable.

Verdict: We’re educating clients about Companies House reforms through social media campaigns and we’ve also had to increase our fees.

Companies House changes won’t affect our practices

James Wood, Accounts Partner, Jackson Stephen LLP

There have not been any significant changes to our practices so far as a result of Companies House reforms. We routinely perform AML checks on our clients each year anyway and we will work with Companies House and clients alike when the changes come into effect to provide the additional information required.

Regarding the fee increase, we have no plans to increase our fees other than annual inflationary increases and we will just have to disburse the additional filing fee ourselves.

When it comes to digitisation, we’re already ahead as we have been filing accounts online for a number of our clients for years. We welcome the changes being introduced meaning we will soon be able to file all online.

Verdict: We already carry out AML checks and are ahead on digitalisation. We will swallow increased Companies House fees ourselves, so the changes won’t really affect us.

There shouldn’t be any cost implications for accountants on the back of Companies House reforms

Angela Brown, Director, Fin Flare

There have been big changes at Companies House but they won’t necessarily have a huge impact on accountants. For example:

Move to digital filing: most accountants will already be filing accounts digitally. This change will bring Companies House more in line with HMRC. There should be minimal impact on most accountants but it may cause some issues for smaller micro-entities that aren’t maintaining digital bookkeeping records.

Move to filing profit & loss accounts for small and micro-entities: The loss of privacy for small companies and removal of the ability to file abridged accounts is concerning. For these businesses, it’s effectively “opening the kimono” revealing turnover and margins for the world to see. How valuable this will be for stakeholders of businesses is questionable. Reasonable financial data is already available through the filing of an annual balance sheet.

Fee increase: the increased Companies House fees are significant but aren’t punitive and most likely reflect higher operating costs at Companies House.

Verdict: There shouldn’t be any cost implications for accountants or the businesses they serve. Any fee increases on the back of these changes would be nothing short of scandalous!

Would you like to contribute to future articles like this one? If so, please get in touch with Annie Makoff-Clark at [email protected].

Annie Makoff is a freelance journalist and editor.