Very small companies may file unaudited short form accounts at Companies House because legally these provide a true and fair view of the business. But the same companies must prepare full statutory accounts e.g. for HMRC. This typically requires 1-2 days work per year for every very small business. It equates to a substantial drag on young companies.
It is economic for larger sized small companies to prepare full unaudited accounts because it reduces the risk of tax underpayment and forces financial discipline on to them. But very small companies are a low corporation tax risk and mamy are IR35 so the requirement for full accounts is not justified.
The burden on very small companies speciifically hinders entrepreneurial start up businesses just at the time people have least resources for dealing with the burden.