You will find the relevant law in the Companies Act 1985 (as amended in 1989 and later).


Back to top 

CHAPTER 1

Accounting reference dates

1. What is a financial year?

Every company must prepare annual accounts that report on the performance and activities of the company during the year. The period reported on in the accounts is called the financial year. This starts on the day after the previous financial year ended or, in the case of a new company, on the day of incorporation.

A more precise term for a financial year is an accounting reference period

The accounting reference period ends on the accounting reference date (ARD) - see questions 2 and 3 - or a date up to seven days either side of the ARD, if this is more convenient.

2. How is the ARD fixed?

For a new company, the ARD is set using its date of incorporation - see question 3. You can change the first accounting reference period and subsequent accounting reference periods by changing the ARD - see questions 4 and 5.

3. What period must a company's first accounts cover?

For all new companies, the first accounting reference period is automatically set as the first anniversary of the last day in the month in which the company was incorporated. For example, if the company was incorporated on 10 June 1999 its ARD would be set at 30 June, and the first accounts would cover a period from 10 June 1999 to 30 June 2000 - or up to seven days either side of that date. Although the ARD is set on incorporation, you can change it - see question 4.

4. Can the ARD be changed?

Yes, by completing Form 225 and sending it to Companies House. But the change can only be made to the current or the immediately previous accounting reference period and you have to register the new ARD before the filing deadline of the accounts. In other words, if Companies House is expecting accounts for a particular accounting reference period and they become overdue, it is too late to say that you wanted to change the ARD. Private companies normally have 10 months and public companies 7 months to send their accounts to Companies House. The period allowed for sending a company's first accounts is calculated differently and this is explained in chapter 2.

5. Are there any restrictions on changing the ARD?

You may change an ARD by shortening an accounting reference period as often as you like and by as many months as you like. However, there are restrictions on extending accounting reference periods:

is subject to the same ARD rules except that it is not restricted as to how often it may extend accounting periods. The same Form 225 is used to change the ARD.

A company incorporated overseas which has registered a branch in Great Britain, and which has to publish accounts in its country of incorporation is subject to different rules - see our booklet, 'Oversea Companies'.


Back to top 

CHAPTER 2

Preparing and filing accounts

This chapter explains the basic rules on filing accounts. It applies to all company accounts irrespective of whether any filing exemptions apply to the content of the accounts.

1. Do all companies have to keep accounting records?

Yes. All limited and unlimited companies, whether or not they are trading, must keep accounting records.

2. What does a set of accounts include?

Generally, accounts must include:

This booklet cannot go into the detailed information that these documents must contain - for this see the Companies Act. Certain information may be omitted from the accounts of medium-sized and small (including very small and dormant) companies prepared under the special provisions of part VII of the Act. These companies may further abbreviate the accounts they file at Companies House - see chapter 3. Very small companies and dormant companies may also be exempt from audit - see chapters 4 and 5.

3. Do all companies have to deliver their accounts to the Registrar?

All limited and public limited companies must send their accounts to the Registrar. If they are eligible and wish to, medium-sized, small, very small and dormant companies may prepare and file 'abbreviated accounts' - see chapter 3, 4 and 5.

Unlimited companies need only deliver accounts to the Registrar if, during the period covered by the accounts, the company was:

4. What period must the accounts cover?

A company's first accounts cover the period starting on the date of incorporation, not the first day of trading. They end on the accounting reference date (ARD) or up to 7 days either side of that date. ARDs and how to change them are covered in chapter 1.

Subsequent accounts start on the day after the previous accounts ended. They finish on the ARD or up to 7 days either side of it.

5. How long do I have to file my company's first accounts?

If you are filing your company's first accounts and they cover a period of more than 12 months, they must be delivered to the Registrar within 22 months of the date of incorporation for private companies and 19 months for public companies or 3 months from the ARD, whichever is longer. The definition of a period of months in connection with filing the accounts also applies to the first accounts. For example, a private company incorporated on 1 January with an Accounting Reference Date (ARD) of 31 January has until midnight on 1 November (22 months from the date of incorporation) to deliver its accounts, not 30 November.

6. How long do I normally have to file my accounts?

Unless you are filing you company's first accounts (see question 5) the time normally allowed for delivering accounts to Companies House is:

7. Can the time allowed for delivering accounts be extended?

If a company carries on business or has interests overseas, a 3-month extension to the normal filing period can be claimed by delivering Form 244 to Companies House. This form must be delivered before the normal filing deadline and this must be done for every year that the company wishes to claim the extension. It does not automatically apply from one year to the next.

An application may also be made to the Secretary of State for Trade and Industry to extend the time for laying and delivering accounts if there is a special reason for doing so. For example, if there has been an unforeseen event which was outside the control of the company and its auditors. The application must be made in writing, be delivered before the normal filing deadline, and must contain a full explanation of the reasons for the extension and the length of the extension needed.

8. What if the accounts are delivered late?

There is an automatic civil penalty for late filing. The amount depends on how late the accounts arrive and whether the company is private or public. The fixed penalties are as follows:

Failing to deliver accounts on time is also a criminal offence for which company directors may be prosecuted. Late filing penalties are fully explained in our booklet, 'Late Filing Penalties'.

9. Who can approve and sign accounts?

The accounts must be approved by the company's board of directors and signed before they are sent to Companies House.

10. Does Companies House give technical advice on accounts?

No. We can give general guidance, but not technical advice on specific accounting issues. Firstly, giving technical advice is not a role that the Government has given us. Secondly, it is not practicable: your accounts are subject to complex legal requirements, and we do not know enough about your company to be confident that we are giving you proper advice.

Consult an accountant if you need this sort of advice.

11. What happens to documents sent to Companies House?

The documents and forms you deliver to Companies House are scanned to produce an electronic image. The original documents are then stored, and the electronic image is used as the working document.

When your business contacts view the company record, they see the electronic image reproduced on-line or on microfilm. So it is important not only that the original is legible, but that it can also produce a clear copy.

The remainder of this chapter lays down a few quality guidelines to follow when preparing accounts and other documents for filing at Companies House.

12. What happens if my documents do not meet the guidelines?

Section 706 of the Act allows Companies House to reject documents that cannot be captured electronically, giving a notice saying why they are unacceptable. An acceptable copy must be delivered within 14 days of the notice (otherwise we treat the original as not having been delivered).

13. How should documents be set out?

Every document delivered to the Registrar must state prominently the registered number of the company, and must comply with any requirements specified by the Registrar relating to the legibility of that document.

Briefly, documents should be on A4 size, plain white paper between 80gsm and 100gsm in weight with a matt finish. Text should be black, clear, legible, and of uniform density.

When you prepare a document:

Glossy accounts

If you are producing colour-printed glossy accounts, please save them for your shareholders and others who will appreciate them. We still need black on white with a matt finish. A typed, unbound version of a printer's proof is ideal, provided it has the necessary signatures.

14. Can I find out more about this?

For further guidance on print requirements contact 029 2038 0575.


Back to top 

CHAPTER 3

Small and medium-sized company exemptions

1. What exemptions are available?

Certain small or medium-sized companies may prepare accounts for their members under the special provisions of sections 246 and 246A of the Companies Act 1985. In addition, they may prepare and deliver abbreviated accounts to the Registrar.

This chapter explains the exemptions available to small and medium-sized companies. Certain small companies with a turnover of less than £1 million (£250,000 for companies that are charities) and assets of less than £1.4 million can claim exemption from audit. This is dealt with in chapter 4.

The period accounts have to cover and the time allowed for sending them to Companies House is covered in chapter 2.

2. What is a small or medium-sized company?

Public companies and certain companies in the regulated sectors cannot qualify as small or medium-sized companies. For other companies, the size of the company (and in the case of a parent company the size of the group headed by it) in terms of its turnover, balance sheet total (meaning the total of the fixed and current assets) and average number of employees determines whether it is classed as small or medium-sized.

The exact conditions for qualifying as a small or medium-sized company are given below.

To be a small company, at least two of the following conditions must be met: