We hope you enjoy our latest monthly collection of interesting and pertinent news and announcements as much as the long-awaited summer weather!
There is a lot of information that will impact and be of interest to accountants and their clients which is why we created our accountants hub so you’ll have access to the most important and accurate insolvency information whenever you need it.
But you can’t be everywhere and read everything all at once, so we collect the most interesting and important business and insolvency news stories every week along with regular new blogs on a range of relevant topics for you each and every week.
We’re always keen to hear what you think so email us at ask@businessrescueexpert.co.uk because we really want to write what you really want to read!
Small Businesses responsible for 60% of Tax Gap
HMRC are reporting that the tax gap – the amount remaining uncollected – has grown to £46.8 billion with small businesses seen as the worst offenders.
Corporation Tax remains the single biggest unpaid tax with £18.6 billion remaining unpaid – 40% of the total, with small businesses continuing to shirk their share.
Their recidivism has increased over the past five years representing 48% of the overall tax gap before the pandemic in 2019/20 before increasing to 60% in 2023/24 equivalent to £28.08 billion.
This is broken down further with £14.7 billion outstanding for corporation tax; £5.8 billion being uncollected from self-assessment taxpayers and £900 million from unpaid PAYE.
Whether non-compliance, errors or failure to pay, small businesses with turnover below £10 million are being closely monitored by HMRC who understand they need to prioritise providing more help for this segment of taxpayers and improve guidance so it’s easier for them to comply with the rules.
A lot then is riding on Making Tax Digital (MTD) for Income Tax in the hope it will help reduce the gap.
HMRC has been given an additional £1.7 billion over the next four years to fund an additional 5,500 compliance and 2,400 debt management staff to bring in more revenue but these staff will take time to train and become more effective in what is a specialist role.
The Treasury claims that measures to close the tax gap announced by Chancellor Rachel Reeves in last autumn’s Budget and Spring Statement 2025 are expected to raise an extra £7.5 billion in tax by clamping down on tax non-payment by the end of this parliament.
One in four accountants are working overtime twice a week
A new survey has found that compliance managers in accountancy firms are regularly working overtime just to keep on top of their workload thanks to money laundering and fraud reporting requirements.
Over 25% of compliance team leaders in accountancy firms are working longer at least two days a week while 42% said they work extra hours at least one day a week according to Thirdfort, a client due diligence platform.
Money laundering is a serious problem costing the UK economy around £100 billion a year and fraud has cost £21 billion between 2020 and 2022 but the onerous reporting requirements from government and HMRC are exacting a toll on the accounting professionals at the sharp end.
Just under half of the respondents (49%) said that their mental health was being negatively impacted.
As compliance teams are generally under-resourced, it’s more beholden on management to understand and appreciate the vital role they fulfil for their firms and clients and help resource them before burn-out and other negative consequences follow.
Insolvency Service launches new plans to fight economic crime
The Insolvency Service has announced a new five-year scheme to play a more prominent role in the fight against economic crime and to be recognised at the UK’s leading authority in enforcing corporate and insolvency standards.
The new strategy commits the agency to broadening its remit to take robust action against criminals who defraud businesses and use AI and advanced analytics to combat sophisticated financial wrongdoing.
They will also focus on tackling money laundering through cryptoassets, seizing more criminal proceeds of crime and expanding its intelligence functions on overseas criminals using shell companies registered in the UK.
They will also continue to investigate Bounce Back Loan abuse after assuming responsibility for investigations from the National Investigation Service (NATIS) earlier this year.
In 2024/25, the Insolvency Service secured 77 criminal convictions, over 1,000 director disqualifications and recovered more than £4 million in compensation. Forty one companies were also wound-up in the public interest following investigations.
Matt Ray, Director of Economic Crime Implementation at the Insolvency Service, said: “Fraud is now the most common crime affecting businesses and individuals across the UK. Meanwhile criminal and corrupt actors continue to use UK corporate structures at a huge scale to obscure their activities and launder the proceeds.
“Alongside our ongoing role upholding the UK’s insolvency framework we will adopt a much more central role in the fight against economic crime and work with Companies House and other partners to tackle the mass misuse of our corporate framework – helping us to deliver economic confidence.
“Over the course of the strategy, our investigators will protect more consumers than ever before from rogue companies, target directors who fail to meet the high standards of behaviour we expect from them and lead the fight against the fraudsters who have exploited government schemes designed to help small businesses.
“By acting against those who are unfit to run companies, we’re reducing the harm caused to legitimate businesses and creditors and creating a prosperous environment that supports economic growth.”
ECCTA will bring big changes to filing accounts soon
The Economic Crime and Corporate Transparency Act (ECCTA) is coming into force on April 1st 2027 which sounds a long way off but as you know, these things have a nasty way of sneaking up on you.
Especially a piece of legislation this big and complicated which requires 50 statutory instruments being passed in order to implement all the measures included in the bill which among other things aims to improve transparency by making more financial information available to the public.
Emails will be going out to stakeholders right now so they may be contacting you about it and what is needed.
To achieve the digitisation of all filing routes, Companies House will require all accounts to be filed using commercial software from April 1st 2027. This means that Companies House’s web-filing and paper routes will be closed for accounts filings (although remaining open for other statutory filings).
The claim is that it will create a single, cost-effective, sustainable and traceable way in which to file accounts with ECCTA contains measures to enable this to happen.
There will be several filing options available depending on company’s size:-
- Micro-entities must file a copy of their balance sheet and profit and loss accounts to the registrar. No directors’ report will be needed as micro-entities have been exempt from preparing a directors’ report since the accounting period commencing on or after January 1st 2016.
- Small companies must file a copy of the balance sheet, directors’ report, auditor’s report (unless exempt) and profit and loss account to the registrar.
- The option to prepare and file abridged financial statements will be abolished.
Audit exemptions
The audit exemption thresholds have recently been increased in line with the small companies’ thresholds for accounting years commencing April 6th 2025. More companies will be able to claim audit exemption on the grounds they are small companies.
There will also be an additional statement required by the directors on the face of the balance sheet. This requires directors to specify which exemption is being claimed and they will need to confirm that the company qualifies for the exemption.
Reference period shortened
Companies House will limit the number of times a company can shorten the reference period.
A company will only be able to shorten an accounting period once every five years. If they want to shorten the period more than once in a five-year period, it will have to provide a business reason before permission can be granted.
There will be more reminders coming down the pipe before the new measures take effect but forewarned is forearmed and it could be worth a conversation with clients now to let them know why things will be changing.
HMRC Dropping Making Tax Digital requirements for Corporation Tax
HMRC have confirmed in their transformation roadmap that they are abandoning Making Tax Digital for corporation tax (MTD for CT) and instead “developing an approach to the future administration of CT that is suited to the varying needs of the diverse CT population.”
They expand little further with the explanation “HMRC recognises that this population includes a very wide range of entities and situations, from small businesses to multinationals, from charities and property management companies to unincorporated associations.”
A timeline for the introduction of MTD for corporation tax had not been set as focus was instead on the launch of MTD for income tax (MTD IT) from April 2026 for those with a threshold above £50,000.
MTD for CT was scheduled to arrive in the 2026/27 tax year but delays to MTD IT had pushed it further down the priority list. If it had gone ahead as planned, corporation tax filers would have had to maintain digital record-keeping, quarterly summary updates and submit annual corporation tax returns via MTD-compatible commercial software.
Emma Rawson, director of public policy at the Association of Taxation Technicians (ATT) said: “It’s almost five years since HMRC last consulted on MTD for CT and we’ve had very little movement or noise since then. We knew that the project had been kicked very far into the long grass, so at least the announcement provides some certainty.
“HMRC’s consultation published in November 2020 indicated that, at that time, four in ten small businesses already kept digital records and presumably this figure was even higher for medium and large companies.
“That number is likely to have increased further in the past five years as more businesses adopt digital tools. It was never clear how imposing extra reporting requirements on entities that were already keeping digital records would have increased their productivity or reduced errors.”
Why Whistleblowing is a requirement for accountants – not a choice
World Whistleblowing Day was on June 23rd and it’s worth looking at why it is an obligation.
Nick Ephgrace, Director of the Serious Fraud Office said in February 2024 that “I think we should pay whistleblowers” and marked a sea change in how the UK approaches whistleblowing, citing the US where 86% of civil settlements and judgements recovered by the US Department of Justice in 2022 were based on whistleblower information.
In March 2025, James Murray, Exchequer Secretary to the Treasury, announced that HMRC will be launching a new reward scheme for informants, targeting serious non-compliance in large corporates, wealthy individuals, offshore and avoidance schemes.
The scheme takes inspiration from the US and Canadian models rewarding informants with a percentage of any tax taken as a result of their actions. This is alongside legislative changes introduced by the Economic Crime and Transparency Act 2023, which makes it simpler to prosecute companies.
The role of professionals
Whistleblowing is a professional obligation for accountants. The ICAEW Code of Ethics for example contains detailed requirements that accountants must follow if they come across instances of Non-compliance with Laws and Regulations (NOCLAR) as covered under sections 260 and 360 of the Code.
These provisions are a good example of the public interest role accountants have. The Code requires that professional accountants comply with the fundamental principles including integrity and professional behaviour, specifically that accountants report when non-compliance is occurring “so that they can deal with the consequences of the non-compliance” including making relevant people aware including in the public interest.
There are various reporting restructures in place although accountants are permitted to disclose NOCLAR to appropriate authorities without reporting it to management if there is an imminent breach of law or regulation that would cause substantial harm to stakeholders.
David Gomez, ICAEW’s Senior Ethics Adviser, said: “ Speaking up about NOCLAW is the price of being a professional and all accountants should respond appropriately whenever they suspect an incident of NOCLAR.
“We recognise that speaking up takes real courage. The ICAEW Ethics helpline is a confidential resource for members who find themselves in this situation. In addition there are resources such as CABA and organisations that specialise in this field, such as Protect.”
World Whistleblowing Day is a reminder that accountants cannot ignore things when they go wrong – they have a duty to act and while rewards for whistleblowers could work well as part of a broader solution, its absence is not an excuse to ignore wrongdoing.