Small company reporting & disclosure requirements:
Small companies are required to file their small companies’ regime according to Section 444 of Companies Act 2006. When this section was examined by companies, partnerships and groups regulations 2015 SI 2015/980 and amended to 444(1). The concept of abbreviated financial statements was put to end in this amended section 441(1). So, this amended section took effect for periods starting on or after 1st January 2016.
According to 444(1) starting on or after 1st January 2016, the directors of small companies are required to file their small companies’ regime to registrar including:
- File a copy of balance sheet for each financial year that drawn up at the last day of that year
- File a copy of the company’s profit and loss account for that year
- File a copy of directors’ report for that year
Moreover, there is a choice for small companies to choose between to file a copy of the company profit & loss account and a copy of the directors’ report. Small companies choose to file a company profit and loss account with a balance sheet as it may prevent sensitive information.
Under new small companies reporting regime, this note that is related to profit and loss account is an exceptional item and that will be filtered through into full financial statements. So, for the periods starting from 1st January 2016, small companies are required to file to the registrar within nine months of accounting reference date to avoid to levy any penalties these fileted accounts or full financial statements that consist of:
- A balance sheet that is prepared for shareholders
- Notes relating to a balance sheet
- Abridged or reduced balance sheet if it has been abridged
- Fewer notes of abridged balance sheet
And not to file:
- Company’s profit and loss account
- Directors’ report
Full financial statements or filleted financial statements: filing full financial statements to HMRC and shareholders:
The filleted financial statement is a term that is used by the accountancy profession to describe the financial statements of a small company which is registered with Companies House. So, a small company can prepare full financial statements under FRS 102 (the financial reporting standard applicable in the UK) and using Section 1A Small Entities. After preparing these full financial statements or fileted financial statements, will be sent to shareholders and HMRC in the same way as they were under the previous FRSSE.
Companies House accounts filing requirements:
The small company requires to file the same balance sheet to Companies House that is prepared for the shareholders. However, a small company can file to Companies House fileted financial statements or fileted accounts that are full financial statements but without directors reports, profit and loss account and notes relating to the profit and loss account. Because under the new small companies reporting regime or the periods starting from 1st January 2016, directors’ reports and profit and loss account or notes relating to profit and loss account have been filleted out for filing purposes.
According to s411 of Companies Act 2006, a small company must disclose in filleted accounts the average numbers of employees that are employed by the company in the financial year. So, a small company should check these fileted financial statements or accounts before going to be filed to Companies House to ensure that this disclosure is contained in accounts. If this disclosure is not contained in accounts, these accounts will be rejected by companies’ house.
Small company thresholds:
To qualify a small company, the company must fulfil two or more of the size the requirements that are the following:
- Small company turnover should not be more than £2£M
- Total balance sheet gross assets should not be more than £1M
- Small company employees should not be more than 50.
Small company filing abridged accounts to Company Houses and members:
Another option that is available to small companies that small companies can prepare abridged accounts to file it to Companies House according to section 381 of the Companies Act 2006. A company can abridge either the profit and loss account or balance sheet or both. Mostly the company used to prepare the unabridged profit and loss accounts (showing turnover, cost of sales and other income) and abridged balance sheet. Then these unabridged profit and loss account is filleted out to abridged financial statements and Companies House receives the rest abridged balance sheet and notes to abridged sheet.
This abridged balance sheet of a company must contain the statement or agreement that showing that all the members have agreed to the entity preparing abridged financial statements and this agreement must be obtained before the approval of financial statements from shareholders.
The most important point that small companies need to keep in mind that the accounts that are prepared for shareholders must be filed to Companies House as these companies cannot prepare the normal set of financial statements to shareholders and then file the abridged financial statements to Company House.
If you want to keep you company accounts records up to date and need any advice for fileted or abridged accounts, you can get in touch by contacting with our professional team of accountants, tax advisors and auditors at Berkshire accountants limited.