Government plans biggest company reporting shake-up in a generation

Too much paperwork? Ministers ask small firms what should be scrapped

Running a limited company could be about to get simpler. The Government has launched a major review of Britain's corporate reporting regime, asking whether decades of accumulated rules, disclosures and paperwork are costing businesses too much time and money for too little benefit. Small and micro companies have until 30 November to tell ministers what should stay, what should change and what should simply disappear.

GOVERNMENT’S MAJOR CONSULTATION TO OVERHAUL CORPORATE REPORTING

The Government has opened a once‑in‑a‑generation consultation into overhauling the UK’s corporate reporting system. Ministers say the current rules have become too complicated, too expensive and too time‑consuming, especially for smaller firms that need to focus on productivity and growth rather than paperwork. Small and micro businesses are being asked for their views.

Corporate Reporting

Corporate reporting is the information registered companies, meaning limited companies, LLPs and other entities registered under the Companies Act, must publish about their finances, performance and risks. It applies to all UK companies, with lighter and simpler requirements for small and micro businesses and more detailed obligations for medium, large and listed companies. The rules don’t apply to businesses that aren’t incorporated through Companies House such as sole traders.

Corporate reporting is meant to help investors, lenders and suppliers make informed decisions. It’s the information banks use when deciding whether to lend to a coffee shop, or that suppliers rely on when choosing whether to work with a growing business.

The Problem

Over time, the annual report has become bloated and confusing. Requirements have been added layer by layer, creating duplication, inconsistency and long documents that hide the information people really need.

Officials say the system has drifted away from its purpose. Reporting rules are scattered across company law, accounting standards and regulatory rules. Many of these were designed for a paper‑based world and haven’t kept pace with digital tools. The Government admits that the costs of many requirements aren’t matched by clear benefits, especially for small and medium‑sized companies.

The consultation sets out five principles for reform: reports should have a clear purpose; companies should be trusted to tell their own story; rules should be simple and coherent; requirements should be proportionate to company size; and the framework should be fit for the future, including digital reporting and emerging technologies.

Proposals

The proposals are wide‑ranging. They include simplifying thresholds and exemptions, removing unnecessary reporting for small and medium‑sized companies, allowing some medium‑sized companies to claim audit exemptions, streamlining accounting standards, replacing complex dividend rules with a simple solvency test, and modernising strategic, governance and remuneration reporting. The Government also wants to embrace digital communication, including virtual AGMs and electronic tagging of information.

Potential Benefits

For small and micro businesses, the potential benefits are significant. The consultation proposes lighter reporting requirements, clearer rules, fewer duplicated disclosures and a simpler financial reporting framework. This could reduce administrative burden, cut costs and free up time for hiring, innovation and growth.

The Government says this is a chance to reset the system, so it works for a modern economy. It needs input from the businesses most affected.

Your Views are Needed

Small and micro businesses are encouraged to respond and explain where reporting is too complex, too costly or not useful. Ministers want to know which requirements should be removed, which thresholds should change and how digital reporting could make life easier.

This is an opportunity for small businesses to shape a simpler, clearer and more proportionate reporting system. The consultation is open until 30 November and responses can be submitted online MCR Consultation | Department for Business, Innovation, Science and Trade. You don’t need to answer all the questions, just the ones you feel strongly about and that affect you.

Click here for the full consultation document Consultation on Modernising Corporate Reporting to support long-term economic growth