Ltd Co profit and loss to be disclosed

[AndyAudi]

Eric Mc said:

…The relaxation of these rather tight rules resulted in an explosion of limited companies with many "one man band" operations being admitted into the limited liability sphere…..

Do you think we’ll see a pretty sharp decline?

One of the changes I see is the information environment we are now in, back in the day a nosy person or competitor could track down the info but now anyone can, instantly. Given how excited some folk get excited about how much profit companies make when reported in the newspapers I’d expect it only a matter of time before there’s angry folk shouting about rip off merchants & boycotts on Facebook after seeing that folks who provided them with something turned a decent profit…

[Eric Mc]

Companies House data was always available to the general public. It was a bit of a faff to get it however. The fact that it is more easily accessible today is, to me, a good thing, not a bad thing.

[EW109]

AndyAudi said:

Eric Mc said:

…The relaxation of these rather tight rules resulted in an explosion of limited companies with many "one man band" operations being admitted into the limited liability sphere…..

Do you think we’ll see a pretty sharp decline?

One of the changes I see is the information environment we are now in, back in the day a nosy person or competitor could track down the info but now anyone can, instantly. Given how excited some folk get excited about how much profit companies make when reported in the newspapers I’d expect it only a matter of time before there’s angry folk shouting about rip off merchants & boycotts on Facebook after seeing that folks who provided them with something turned a decent profit…

As I pointed out above, you can have privacy at the cost of unlimited liability (including by an unlimited company: a company does not have to be limited). But I don't see why people should think they have any right to privacy and limited liability.

[youngsyr]

EW109 said:

AndyAudi said:

Eric Mc said:

…The relaxation of these rather tight rules resulted in an explosion of limited companies with many "one man band" operations being admitted into the limited liability sphere…..

Do you think we’ll see a pretty sharp decline?

One of the changes I see is the information environment we are now in, back in the day a nosy person or competitor could track down the info but now anyone can, instantly. Given how excited some folk get excited about how much profit companies make when reported in the newspapers I’d expect it only a matter of time before there’s angry folk shouting about rip off merchants & boycotts on Facebook after seeing that folks who provided them with something turned a decent profit…

As I pointed out above, you can have privacy at the cost of unlimited liability (including by an unlimited company: a company does not have to be limited). But I don't see why people should think they have any right to privacy and limited liability.

Perhaps unsurprising for PH, but that's an extremely one sided view.

Another view might be "why should Joe Bloggs have a right to see my company's turnover, margins and profit?"

Yet another "if I'm a contractor working as part of a hundred million pound contract and don't want to publish my income, I now need to go unlimited, which means I now need to charge substantially more for the risk I'm taking against my personal assets, which reduces the UK's competitiveness against contractors in places like the US". Great for UK Plc, I think not.

[Hill92]

youngsyr said:

Perhaps unsurprising for PH, but that's an extremely one sided view.

Another view might be "why should Joe Bloggs have a right to see my company's turnover, margins and profit?"

Yet another "if I'm a contractor working as part of a hundred million pound contract and don't want to publish my income, I now need to go unlimited, which means I now need to charge substantially more for the risk I'm taking against my personal assets, which reduces the UK's competitiveness against contractors in places like the US". Great for UK Plc, I think not.

Why should you be allowed to hide the risk from Joe Bloggs when you're not prepared to take it yourself?

Limited liability comes with responsibilities, one of which is transparency.

As far as competitiveness goes, the lack of transparency causes more harm because it makes micro-entities and small companies more risky to engage with.

[youngsyr]

Hill92 said:

Why should you be allowed to hide the risk from Joe Bloggs when you're not prepared to take it yourself?

What risk is Joe Bloggs taking exactly???

I'm talking about a random person on the street who has nothing to do with your company.

[youngsyr]

Hill92 said:

Limited liability comes with responsibilities, one of which is transparency.

What does "transparency" mean exactly?

When it comes to removing people's rights to privacy, in my opinion we need to be very careful in how we do it and only do it to the bare minimum necessary.

This is a massive over reach.

[youngsyr]

Hill92 said:

As far as competitiveness goes, the lack of transparency causes more harm because it makes micro-entities and small companies more risky to engage with.

Absolute nonsense. You could demand to see a P&L before engaging with any company as the rules were previously. This adds nothing to reduce the risk of engaging with small and micro-companies.

[Eric Mc]

youngsyr said:

Hill92 said:

Why should you be allowed to hide the risk from Joe Bloggs when you're not prepared to take it yourself?

What risk is Joe Bloggs taking exactly???

I'm talking about a random person on the street who has nothing to do with your company.

Random persons hardly ever bother with such things. People who are dealing with or intending to deal with a company tend to be the ones who might go to the trouble of doing some background checks. That was always the case and by and large will remain so.

If you want anonymity, close the company and trade under your own name.

[Eric Mc]

youngsyr said:

This is a massive over reach.

As it must also have been between about 1860 and 1992.

[MaxFromage]

youngsyr said:

You could demand to see a P&L before engaging with any company as the rules were previously. This adds nothing to reduce the risk of engaging with small and micro-companies.

Agreed. And credit checking works well on small companies.

[MaxFromage]

Eric Mc said:

If you want anonymity, close the company and trade under your own name.

I think this is the wrong way to look at it personally and keeping some anonymity would be better on balance. Why? Well we all know a significant proportion of business owners will get away with whatever they can. At least they are constrained somewhat by the limited company setup. If they pack it in and move back to a sole trader, they can 'get away' with even more.

[Hill92]

youngsyr said:

What risk is Joe Bloggs taking exactly???

I'm talking about a random person on the street who has nothing to do with your company.

What does "transparency" mean exactly?

When it comes to removing people's rights to privacy, in my opinion we need to be very careful in how we do it and only do it to the bare minimum necessary.

This is a massive over reach.

Absolute nonsense. You could demand to see a P&L before engaging with any company as the rules were previously. This adds nothing to reduce the risk of engaging with small and micro-companies.

Data protection and privacy only applies to personal data about natural persons. Companies do not have a right to privacy.

The economy has long recognised the economic advantages of limited liability but also the risks. That's why company law imposes certain obligations and responsibilities in exchange for limited liability.

Any potential customer, creditor, lender, employee, landlord or any other type of counterparty has an interest in the health of any party they may transact with, especially when that other's liability is limited. Hiding key information creates friction and increases the economic cost of transacting.

Wider society (media, politicians, campaigners, academics, and yes any random Joe Bloggs on the stree) in the financial statements of a company which society has granted limited liability to.

Unlimited liability remains available for any company not willing to accept those obligations.

Basic transparency about any limited liability company should include as a minimum:
The company name, registered number and registered office
The certificate of incorporation
The articles and memorandum of incorporation
The identity of the directors
The identity of members of the company
The identity of ultimate beneficial owners
A director's report describing basic information such as the principal activities of the company, dividends proposed/declared and political donations
An audit report if the company or members require one
A profit and loss account
A balance sheet
And explanatory notes, including accounting policies, employee numbers, tax and related party disclosures in accordance with a recognised financial reporting framework.

Other public registers capture details about land the company owns, transactions with government bodies, political parties and members of parliament and regulated activities carried out by the company.

[youngsyr]

Eric Mc said:

youngsyr said:

Hill92 said:

Why should you be allowed to hide the risk from Joe Bloggs when you're not prepared to take it yourself?

What risk is Joe Bloggs taking exactly???

I'm talking about a random person on the street who has nothing to do with your company.

Random persons hardly ever bother with such things. People who are dealing with or intending to deal with a company tend to be the ones who might go to the trouble of doing some background checks. That was always the case and by and large will remain so.

If you want anonymity, close the company and trade under your own name.

Your logic doesn't make any sense Eric.

If the general public "hardly ever bother with such things", then why make it law that small and micro companies have to allow them to be able to see them?

And if those who intend to deal with a company can and do ask for it already, why change the current law?

[youngsyr]

Hill92 said:

youngsyr said:

What risk is Joe Bloggs taking exactly???

I'm talking about a random person on the street who has nothing to do with your company.

What does "transparency" mean exactly?

When it comes to removing people's rights to privacy, in my opinion we need to be very careful in how we do it and only do it to the bare minimum necessary.

This is a massive over reach.

Absolute nonsense. You could demand to see a P&L before engaging with any company as the rules were previously. This adds nothing to reduce the risk of engaging with small and micro-companies.

Data protection and privacy only applies to personal data about natural persons. Companies do not have a right to privacy.

The economy has long recognised the economic advantages of limited liability but also the risks. That's why company law imposes certain obligations and responsibilities in exchange for limited liability.

Any potential customer, creditor, lender, employee, landlord or any other type of counterparty has an interest in the health of any party they may transact with, especially when that other's liability is limited. Hiding key information creates friction and increases the economic cost of transacting.

Wider society (media, politicians, campaigners, academics, and yes any random Joe Bloggs on the stree) in the financial statements of a company which society has granted limited liability to.

Unlimited liability remains available for any company not willing to accept those obligations.

Basic transparency about any limited liability company should include as a minimum:
The company name, registered number and registered office
The certificate of incorporation
The articles and memorandum of incorporation
The identity of the directors
The identity of members of the company
The identity of ultimate beneficial owners
A director's report describing basic information such as the principal activities of the company, dividends proposed/declared and political donations
An audit report if the company or members require one
A profit and loss account
A balance sheet
And explanatory notes, including accounting policies, employee numbers, tax and related party disclosures in accordance with a recognised financial reporting framework.

Other public registers capture details about land the company owns, transactions with government bodies, political parties and members of parliament and regulated activities carried out by the company.

This is all a nonsense - you quote laws that state that companies aren't entitled to not publish their P&L, whilst ignoring the fact that until this change, the law stated that they could!

And if the government wants to grant persons with a legitimate interest in a company the right to see its P&L, they should make the law reflect that, just as currently companies are required to file their P&L with HMRC.

The answer to improved transparency is not to just blanket allow anyone whatsoever to see it.

[Eric Mc]

MaxFromage said:

Eric Mc said:

If you want anonymity, close the company and trade under your own name.

I think this is the wrong way to look at it personally and keeping some anonymity would be better on balance. Why? Well we all know a significant proportion of business owners will get away with whatever they can. At least they are constrained somewhat by the limited company setup. If they pack it in and move back to a sole trader, they can 'get away' with even more.

In my experience, as an accountant who has both sole trader and partnership clients (both classes operating without limited liability), it is those two categories who are more concerned about getting things wrong than those who operate through limited companies. A largish partnership or sole trader is far more careful than a small one man band limited company.

Operating through a limited company is usually done to MITIGATE risk to the shareholders and directors - often the same people. As a result, people who are running their business through a limited company are, shall we say, a little less careful about some aspects of their businesses.

[Eric Mc]

youngsyr said:

Your logic doesn't make any sense Eric.

If the general public "hardly ever bother with such things", then why make it law that small and micro companies have to allow them to be able to see them?

And if those who intend to deal with a company can and do ask for it already, why change the current law?

Of course its logical. Even if the general population aren't that worried about such things does not mean that those who are interested in such information are blocked from seeing it.

And just because someone who wants to deal with a company can ask, they have no options if the information is refused to them - unless they decide not to deal with the company they are inquiring about.

Limited liability is not a right. It is a privilege. Over the past three decades obtaining limited liability has been made easier and easier. Conversely, the obligations have not got harder. In fact, they've got easier too.

It's about time that directors were made understand the responsibilities they have under law - as older versions of Company Law used to emphasise.

[youngsyr]

Eric Mc said:

youngsyr said:

Your logic doesn't make any sense Eric.

If the general public "hardly ever bother with such things", then why make it law that small and micro companies have to allow them to be able to see them?

And if those who intend to deal with a company can and do ask for it already, why change the current law?

Of course its logical. Even if the general population aren't that worried about such things does not mean that those who are interested in such information are blocked from seeing it.

And just because someone who wants to deal with a company can ask, they have no options if the information is refused to them - unless they decide not to deal with the company they are inquiring about.

Limited liability is not a right. It is a privilege. Over the past three decades obtaining limited liability has been made easier and easier. Conversely, the obligations have not got harder. In fact, they've got easier too.

It's about time that directors were made understand the responsibilities they have under law - as older versions of Company Law used to emphasise.

You're conflating issues here - if directors don't understand their responsibilities under the law, then enforce education and/or sanctions. Making them publish a P&L does nothing to address this supposed weakness.

And for the umpteenth time, if a person has a legitimate interest in seeing the P&L then they can ask to see it and refuse to engage with the company if it's not provided.

And for research purposes, it is a very simple matter to make legitimate parties register with companies house and give them and them alone unlimited access to companies' P&Ls.

The blanket requirement to publish is a sledgehammer to crack a nut.

[Eric Mc]

You obviously have got a bee in your bonnet on this.

Look on it as the price you have to pay to obtain particular privileges.

You can avoid it by not operating trough a limited company.

That's what used to happen when earlier versions of Company Law were in place.

If you don't like the rules, there are other options you can legitimately use to avoid them.

[youngsyr]

I've got a bee in my bonnet because it's yet another massive over reach by the government spun as a solution to a problem that not only did no-one have in the first place, but doesn't actually do what it's said to do!