Contents
Back to top
Introduction
This booklet is a
guide to the rules
governing public disclosure
of accounts by all
limited companies.
The booklet covers
three main topics:
-
Accounting
reference dates
(ARD).
The ARD is the
financial year-end.
It is also the
date that determines
when accounts
are due for
delivery to
Companies House.
Every company
has an ARD.
Companies House
must be told
in advance when
the date is
about to be
changed. It
can be costly
if you forget
to tell us and
prepare accounts
to the wrong
date. If you
do, we will
refuse registration
of the accounts
and you will
have to prepare
fresh accounts
to the ARD held
on record at
Companies House.
-
Preparing
and filing accounts.
There are deadlines
by which accounts
must be prepared
and delivered
to Companies
House. If you
miss the deadline
an automatic
penalty will
be levied, without
exception. So
it is important
that you, your
accountants
and your auditors
are aware of
the filing deadline.
-
Content
of accounts.
This booklet
cannot tell
you how to prepare
company accounts
- your accountant
has specialist
knowledge of
this. But it
will tell you
what documents
make up a set
of accounts,
what exemptions
you may be able
to take advantage
of, and whether
you will need
to appoint an
auditor.
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:
-
You
may not extend
a period so
that it lasts
more than 18
months from
the start date
of the accounting
period.
-
You
may not extend
more than once
in 5 years unless:
(a) the company
is subject to
an administration
order; or
(b) the Secretary
of State has
directed this;
or
(c) the company
is aligning
its accounting
reference date
with that of
a subsidiary
or parent undertaking
established
within the European
Economic Area.
Countries comprising
the European
Economic Area
are as follows:
Iceland, Norway,
Finland, Sweden,
Ireland, United
Kingdom, Denmark,
Germany, Netherlands,
Belgium, Luxembourg,
Austria, Portugal,
Spain, France,
Italy, Greece,
Liechtenstein,
Czech Republic,
Estonia, Cyprus,
Latvia, Lithuania,
Hungary, Malta,
Poland, Slovenia,
Slovakia.
6. What about
companies incorporated
overseas?
A company incorporated
overseas which has
registered:
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:
- a profit
and loss account
(or income and
expenditure account
if the company
is not trading
for profit);
- a balance
sheet
signed by a director;
- an auditors'
report
signed by the
auditor (if appropriate);
- a directors'
report
signed by a director
or the secretary
of the company;
- notes to the
accounts; and
- group accounts
(if appropriate).
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:
- for a private
company,
10 months from
the ARD;
- for a public
company,
7 months from
the ARD.
However, if the accounting
reference period has
been shortened, the
time allowed for filing
the accounts is the
longer of:
- for a private
company 10 months
(or for a public
company 7 months)
from the ARD;
or
- 3 months from
the date of the
notice (Form 225).
Please
be aware
of the definition
of a period
of months
in connection
with filing
accounts.
A period
of months
after a
given date
ends on
the corresponding
date in
the appropriate
month. For
example
a private
company
with an
ARD of 30
September
has until
midnight
on 30 July
of the following
year to
deliver
its accounts,
not 31
July.
If there
is no corresponding
date, the
last day
of the month
will apply.
For example,
a private
company
with an
ARD of 30
April has
until midnight
on 28 February
the following
year to
deliver
its accounts.
|
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.
For
companies incorporated
in
England & Wales
write to: |
For
companies incorporated
in
Scotland write
to: |
The
Secretary of
State for
Trade &
Industry
c/o Companies
Admin Section
Companies House
Crown Way
Cardiff CF14
3UZ
DX33050 Cardiff |
The
Secretary of
State for
Trade &
Industry
Companies House
37 Castle Terrace
Edinburgh EH1
2EB
DX ED235 Edinburgh
1 |
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:
| Length
of delay |
Public
company |
Private
company |
| 3
months or less |
£
500 |
£100 |
| 3
months one day
to 6 months |
£1000 |
£250 |
| 6
months one day
to 12 months |
£2000 |
£500 |
| More
than 12 months |
£5000 |
£1000 |
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'.
Please
note: if
a filing
deadline
expires
on a Sunday
or Bank
Holiday
the law
still requires
accounts
to be filed
by that
date. So
you should
ensure that
they are
posted in
time to
arrive before
such a deadline.
|
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.
-
The
balance sheet
must be signed
by a director,
with any statements
about accounting
or filing exemptions
appearing above
the director's
signature.
- The directors'
report, if one
is required, must
be signed by a
director or the
company secretary.
-
If
an auditors'
report, special
auditors' report
or accountants'
report is attached
to the accounts,
then it must
state the names
of the auditors
or accountants
and be signed
by them.
|
You do not
have to lay
the accounts
before a general
meeting of the
company, or
have them agreed
by the Inland
Revenue, before
sending them
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:
- use black ink
or black type;
- use bold lettering
(some elegant
thin typefaces
and pens give
poor quality copies);
- don't send a
carbon copy;
- don't use a
dot matrix printer;
- remember - photocopies
can result in
a grey shade that
will not scan
well;
- use A4 size
paper with a good
margin; and
- include the
company number
in the top right-hand
corner of the
first page.
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:
- annual turnover
must be £2,800,000
or less;
- the balance
sheet total must
be £1,400,000
or less;
- the average
number of employees
must be 50 or
fewer.
Please
note:
New accounting
exemption thresholds
apply to financial
years ending
on or after
30 January 2004.
To be a small
company, at
least 2 of the
following conditions
must be met:
- annual
turnover
must be
£5.6
million
or less;
- the balance
sheet total
must be
£2.8
million
or less;
- the average
number of
employees
must be
50 or fewer.
|
To be a medium-sized
company, at least
two of the following
conditions must be
met:
- annual turnover
must be £11,200,000
or less;
- the balance
sheet total must
be £5,600,000
or less;
- the average
number of employees
must be 250 or
fewer.
Please
note: New
accounting exemption
thresholds apply
to financial
years ending
on or after
30 January 2004.
To be a medium-sized
company, at
least 2 of the
following conditions
must be met:
- annual
turnover
must be
£22.8
million
or less;
- the balance
sheet total
must be
£11.4
million
or less;
- the average
number of
employees
must be
250 or fewer.
|
If the company is
a parent company,
it cannot qualify
as a small or medium-sized
company unless the
group headed by
it is also small
or medium-sized.
The exact conditions
for qualifying as
a small or medium-sized
group are given
at question 4.
Generally, a company
qualifies as 'small'
or 'medium-sized'
in its first financial
year, or in any
subsequent financial
year if it fulfils
the conditions in
that year and the
year before. If
the company ceases
to be small or medium-sized,
the exemption continues
for the first year
that the company
does not fulfil
the conditions.
And the exemption
continues uninterrupted
if the company reverts
to being small or
medium-sized the
following year -
see the table below.
If you think the
company might qualify
as small or medium-sized,
you should consult
a professional accountant
before you prepare
'special-provision'
accounts. If you
abbreviate the accounts,
you will also need
a special auditor's
report for filing
with the Registrar,
confirming that
the company qualifies
to produce such
accounts. This report
is not needed if
the company is exempt
from audit - see
chapter
4 on very small
companies.
The following table
may help you decide
whether you qualify
to prepare 'small'
or 'medium' accounts.
The table applies
to small companies.
For medium-sized
companies simply
substitute 'medium-sized'
for 'small'.
| Year
1 |
Year
2 |
Year
3 |
Qualified
in: |
| |
1st
financial year |
| small |
|
|
Yes |
| not
small |
|
|
No |
| |
2nd
financial year |
| small |
small |
|
Yes |
| small |
not
small |
|
Yes |
| not
small |
small |
|
No |
| |
3rd
financial year |
| small |
small |
not
small |
Yes |
| small |
not
small |
small |
Yes |
| not
small |
small |
small |
Yes |
| small |
not
small |
not
small |
No |
| not
small |
small |
not
small |
No |
| not
small |
not
small |
not
small |
No |
3. What
does a small or
medium-sized company
have to deliver
to the Registrar?
The company can
deliver the accounts
which were prepared
for its members
under the special
provisions of part
VII of the Companies
Act 1985, or it
can deliver an abbreviated
version of these
accounts.
Abbreviated accounts
of a small company
must include:
- The abbreviated
balance sheet
and notes; and
- a special auditor's
report (unless
the company is
also claiming
audit exemption
- see chapters
4
and 5).
Abbreviated accounts
of a medium-sized
company must include:
- the abbreviated
profit and loss
account;
- the full balance
sheet;
- a special auditor's
report;
- the directors'
report; and
- notes to the
accounts.
The
special auditor's
report should state
that in the auditor's
opinion the company
is entitled to deliver
abbreviated accounts
and that they have
been properly prepared
in accordance with
section 246(5) or
(6) or 246A(3) of
the Companies Act
1985, as the case
may be.
The balance sheet
(and if appropriate,
the directors' report)
must contain a statement
that the accounts
are prepared in
accordance with
the special provisions
in Part VII of the
Companies Act 1985
relating to small
or medium-sized
companies, as the
case may be.
4. Are there
special rules for
small and medium-sized
groups?
Yes, a parent company
need not prepare
group accounts or
send them to the
Registrar if the
group is small or
medium-sized and
none of its member
companies is: a
public company,
a person who has
permission under
Part 4 of the Financial
Services and Markets
Act 2000 to carry
on a regulated activity,
or a person who
carries on insurance
market activity.
To qualify as small,
a group of companies
must meet at least
two of the following
conditions:
- aggregate turnover
must be £2,800,000
net (£3,360,000
gross) or less;
- the aggregate
balance sheet
total must be
£1,400,000 net
(£1,680,000 gross)
or less;
- the aggregate
average number
of employees must
be 50 or fewer.
Please
note: New
accounting
exemption
thresholds
apply to financial
years ending
on or after
30 January
2004.
To qualify
as small,
a group must
meet at least
two of the
following
conditions:
- aggregate
turnover
must be
£5.6
million
net (£6.72
million
gross) or
less;
- the aggregate
balance
sheet total
must be
£2.8
million
net (or
£3.36
million
gross);
- the aggregate
average
number of
employees
must be
50 or fewer.
|
To qualify as medium-sized,
a group must satisfy
at least two of the
following conditions:
- its aggregate
turnover must
be £11,200,000
net (£13,440,000
gross) or less;
- the aggregate
balance sheet
total must be
£5,600,000 net
(£6,720,000 gross)
or less;
- the aggregate
average number
of employees must
be 250 or fewer.
Please
note: New
accounting
exemption
thresholds
apply to financial
years ending
on or after
30 January
2004.
To qualify
as medium-sized,
a group must
meet at least
two of the
following
conditions:
- aggregate
turnover
must be
£22.8
million
net (or
£27.36
million
gross);
- the aggregate
balance
sheet total
must be
£11.4
million
net (or
£13.68
million
gross);
- the aggregate
average
number of
employees
must be
250 or fewer.
|
5. What if a small
or medium-sized
company is required
to prepare group
accounts?
A small parent company
which has prepared
individual accounts
for its members
using the special
provisions of section
246(2) or (3) of
the Companies Act
1985, may choose
to prepare group
accounts under the
special provisions
of section 248A.
However, a small
group cannot file
abbreviated accounts
at Companies House.
Group accounts prepared
under section 248A
must contain a statement
above the signature
on the balance sheet,
confirming that
they are prepared
in accordance with
the special provisions
of Part VII of the
Companies Act 1985
relating to small
companies.
If a medium-sized
company decides
to prepare group
accounts, they must
be full group accounts.
|
Format
of accounts
The format
of the accounts
must follow
the relevant
Schedules
to the Companies
Act 1985.
The provisions
relating to
small and
medium-sized
companies
are in Schedules
4, 5, 6, 8
and 8A.
|
6. How long
do I have to deliver
accounts to Companies
House?
The same time applies
as for all other
accounts. The same
penalties are imposed
for late filing.
See chapter
2.
Back to top
CHAPTER
4
Very small company
audit exemptions
1. What
exemption is available?
There is total exemption
from audit for certain
small companies
(including very
small charitable
companies) if they
are eligible and
wish to take advantage
it. Some charitable
companies are exempt
from audit but must
provide an accountant's
report on the accounts
(partial exemption).
Further details
about how to claim
exemption are in
this chapter.
2. Which
small companies
qualify for audit
exemption?
To qualify for total
audit exemption,
a company must
- qualify as small
(see chapter
3)
- have a turnover
of not be more
than £1 million;
and
- have a balance
sheet total of
not more than
£1.4 million.
Please
note: New
audit exemption
thresholds apply
to financial
years ending
after 30 March
2004.
To qualify for
total audit
exemption, a
company must:
- qualify
as small;
- have a
turnover
of not more
than £5.6
million;
and
- have a
balance
sheet total
of not more
than £2.8
million.
|
For a charitable
company to qualify
for total audit
exemption it must
qualify as small
(see chapter
3), its gross
income must not
be more than £90,000
and its balance
sheet total must
not be more than
£1.4 million.
Charitable companies
which qualify as
small (see chapter
3) and have
a gross income between
£90,000 and £250,000
and a balance sheet
total of no more
than £1.4 million
qualify for partial
exemption.
3. Are all
types of small companies
eligible for the
exemption?
No. Audited accounts
must be delivered
to Companies House
if the company falls
into any of the
following categories:
(a) A parent company
or subsidiary undertaking
(unless dormant
for the period during
which it was a subsidiary)
except where:
-
the
group qualifies
as a small group
or would qualify
if all the bodies
corporate in
the group were
companies; and
-
the
turnover for
the whole group
is not more
than £1 million
net or £1.2
million gross
(for a financial
year which ended
before 26 July
2000 or if the
company is a
charity, the
combined turnover
must be no more
than £350,000
net or £420,000
gross); and
- the group's
combined balance
sheet total is
not more than
£1.4 million net
(£1.68 million
gross).
Please
note:
New audit
exemption
thresholds
apply to
financial
years ending
after 30
March 2004.
A parent
company
or subsidiary
undertaking
(unless
dormant
for the
period during
which it
was a subsidiary)
cannot qualify
except where
the group:
-
qualifies
as a small
group or
would qualify
if all the
bodies corporate
in the group
were companies
; and
-
the turnover
for the
whole group
is not more
than £5.6
million
net (or
£6.72
million
gross);
and
-
the group’s
combined
balance
sheet total
is not more
than £2.8
million
net (or
£3.36
million
gross).
|
(b) A member of a
group of companies
in which any member
is:
-
a
public company
or body corporate
which (not being
a company) has
power under
its constitution
to offer shares
or debentures
to the public;
-
a
person who has
permission under
Part 4 of the
Financial Services
and Markets
Act 2000 to
carry on a regulated
activity;
-
a
person who carries
on insurance
market activity.
(c)
A person who has
permission under
Part 4 of the Financial
Services and Markets
Act 2000 to carry
on a regulated activity.
(d) A person who
carries on insurance
market activity.
(e) An appointed
representative within
the meaning of s.39
of the Financial
Services and Markets
Act 2000.
(f) A public limited
company unless the
company is dormant
- see chapter
5.
(g) A special register
body or employers
association under
the Trade Union
and Labour Relations
(Consolidation)
Act 1992.
(h) A company where
an audit is required
by a member or members
holding at least
10% of the nominal
value of issued
share capital or
holding 10% of any
class of shares;
or - in the case
of a company limited
by guarantee - 10%
of its members in
number. The demand
for the accounts
to be audited should
be in the form of
written notice to
the company, deposited
at the registered
office at least
one month before
the end of the financial
year in question.
Some
flat management
companies
may have
to prepare
audited
accounts
to comply
with the
terms of
their lease.
If in doubt,
you should
seek professional
advice.
|
4. What
does an audit-exempt
company need to
send to Companies
House?
If the company qualifies
(see question 2
and 3), unaudited
accounts may be
delivered to the
Registrar in the
form of an abbreviated
balance sheet and
notes. The balance
sheet must contain
the following statements
above the director's
signature:
(a) For the year
ended . . . (date)
the company was
entitled to exemption
under section 249A(1)
of the Companies
Act 1985. (In the
case of charitable
companies which
are claiming partial
exemption, the reference
will be to section
249A(2)).
(b) Members have
not required the
company to obtain
an audit in accordance
with section 249B(2)
of the Companies
Act 1985.
(c) The directors
acknowledge their
responsibility for:
i. ensuring the
company keeps accounting
records which comply
with section 221;
and
ii. preparing accounts
which give a true
and fair view of
the state of affairs
of the company as
at the end of the
financial year,
and of its profit
or loss for the
financial year,
in accordance with
the requirements
of section 226,
and which otherwise
comply with the
requirements of
the Companies Act
relating to accounts,
so far as applicable
to the company;
(d) The accounts
have been prepared
in accordance with
the special provisions
in Part VII of the
Companies Act 1985
relating to small
companies.
If the company chooses,
it may deliver the
un-abbreviated accounts
prepared for its
members. The same
statements must
appear on the un-abbreviated
balance sheet.
5. My company
is a charity claiming
partial exemption,
what must the accountant's
report say?
The accountant's
report must state
that:
(a) the accounts
of the company for
the financial year
in question are
in agreement with
the accounting records
kept by the company
under section 221
of the Companies
Act 1985; and
(b) having regard
only to, and on
the basis of, the
information in those
accounting records,
those accounts have
been drawn up in
a manner consistent
with the provisions
of the Act as specified
in subsection (6)
of section 249C,
so far as applicable
to the company.
(c) having regard
only to, and on
the basis of, the
information in the
accounting records,
the company satisfied
the requirements
of section 249A(4),
for the financial
year in question,
and did not fall
within section 249B(1)(a)
to (f) at any time
within that financial
year.
The report must
show the name and
signature of the
reporting accountant.
6. Who can
be a reporting accountant?
A reporting accountant
is either:
-
any
member of a
body listed
below who, under
the rules of
that body, is
entitled to
engage in public
practice, and
who is eligible
for appointment
as a reporting
accountant;
or
-
any
person, (whether
or not a member
of any such
body), who is
eligible for
appointment
as a company
auditor under
the rules of
that body.
The
bodies referred
to above are the:
(a) the Institute
of Chartered Accountants
in England and Wales;
(b) Institute of
Chartered Accountants
of Scotland;
(c) Institute of
Chartered Accountants
in Ireland;
(d) Association
of Chartered Certified
Accountants;
(e) Association
of Authorised Public
Accountants;
(f) Association
of Accounting Technicians;
(g) Association
of International
Accountants;
(h) Chartered Institute
of Management Accountants.
(i) Institute of
Chartered Secretaries
and Administrators.
(This new addition
applies to financial
years ending on
or after 30 January
2004).
An individual, body
corporate or firm
may be appointed
as a reporting accountant.
A partnership that
is not a legal person
may be appointed
under section 26
of the Companies
Act 1989.
The reporting accountant
must be independent
and meet the conditions
set out in section
27 of the Companies
Act 1989. This means,
for example, that
he or she cannot
be an officer or
employee of the
company.
7. How long
do I have to deliver
accounts to Companies
House?
The same time applies
as for all other
accounts. The same
penalties are imposed
for late filing.
See chapter
2.
8. Does
an audit exempt
company still have
to send accounts
to its members?
Yes. In accordance
with the Companies
Act 1985, members
have a right to
receive or demand
copies of accounts
and the related
reports.
|
Possible
drawbacks
of unaudited
accounts
Banks and
credit managers
rely on information
available
from Companies
House to assess
a company's
creditworthiness
and currently
look for the
reassurance
of an independent
audit. If
it qualifies
for audit
exemption,
a company
will need
to decide
whether unaudited
accounts are
appropriate
to its own
circumstances.
|
9. Are annual
accounts required
if a company is
not trading?
All limited companies,
whether they trade
or not, must deliver
accounts to Companies
House. However,
a limited company
may claim exemption
from audit as a
'dormant company'
if it has not traded
during a financial
year, and provided
it meets certain
other criteria (see
chapter
5).
Dormant companies
do not need to appoint
auditors and can
deliver even simpler
annual accounts
to Companies House.
For more information
about dormant company
accounts, see chapter
5.
10. My company's
articles of association
state that the company
must have an auditor
but otherwise we
would be exempt.
What can we do?
Companies may decide
to revise their
articles of association
to ensure that these
do not stop them
taking advantage
of the audit exemptions.
Companies with articles
based on the model
articles at Table
A of the Companies
Act 1985 are unlikely
to have such problems.
However, the 1948
version of Table
A (and other similar
earlier provisions)
imposes an obligation
to appoint auditors.
Companies with such
articles may wish
to take legal advice
about possible changes.
Back
to top
CHAPTER 5
Audit exemption
for dormant companies
1. What
exemption is available?
Dormant companies
can claim exemption
from audit and need
only prepare and
deliver to Companies
House an abbreviated
balance sheet and
notes. A profit-and-loss
account and directors'
report do not have
to be included in
dormant company
accounts filed at
Companies House
but a directors'
report must be provided
to members.
2. What
is a dormant company?
A company is dormant
if it has had no
'significant accounting
transactions' during
the period.
For accounting periods
ending on or after
26 July 2000,when
considering if a
company is dormant
you can disregard
the following financial
transactions:
- payment for
shares taken by
subscribers to
the memorandum
of association;
-
fees
paid to the
Registrar of
Companies for
a change of
company name,
the re-registration
of a company
and filing annual
returns; and
-
payment
made in respect
of civil penalties
imposed by the
Registrar of
Companies for
delivering accounts
to the Registrar
after the statutory
time allowed
for filing.
For
accounting periods
ending before 26
July 2000, only
payment for shares
taken by subscribers
to the memorandum
of association may
be disregarded.
A company may not
take advantage of
the dormant company
audit exemption
if it is:
If
the company has
not been dormant
since incorporation,
but has become dormant,
it may take advantage
of the exemptions
provided that:
- it has been
dormant since
the end of the
previous financial
year; and
- it does not
have to prepare
group accounts
for that year;
and
-
it
qualifies as
a 'small company'
in relation
to that year
(see chapter
3), or would
have qualified
as small but
for the fact
that it is:
- a public
company;
or
- a member
of a group
of companies
which included:
a public
company,
a person
who has
permission
under Part
4 of the
Financial
Services
and Markets
Act 2000
to carry
on a regulated
activity,
or a person
who carries
on insurance
market activity.
3.
What information
must dormant accounts
contain?
Dormant accounts
filed at Companies
House need not include
a profit-and-loss
account or directors'
report. Model balance
sheets are shown
at the end of this
chapter.
Unaudited dormant
accounts are much
simpler than those
of a trading company
but must show:
-
an
abbreviated
balance sheet
containing statements
above the director's
signature to
the effect that
the company
was dormant
throughout the
accounting period.
The full text
of the required
statements is
as question
4 below or,
for financial
years ending
before 26 July
2000, at question
5 below);
-
any
previous year's
figures for
comparison -
even though
there are no
items of income
or expenditure
for the current
year;
- certain notes
to the balance
sheet - a full
list of items
to be covered
appears at the
end of this chapter.
4.
What statements
are needed on the
balance sheet?
For financial years
ending before 26
July 2000, see question
5.
For accounts in
respect of financial
years ending on
or after 26 July
2000 the following
statements must
appear above the
director's signature:
(a) For the year
ended . . . (date)
the company was
entitled to exemption
under section 249AA(1)
of the Companies
Act 1985.
(b) Members have
not required the
company to obtain
an audit in accordance
with section 249B(2)
of the Companies
Act 1985.
(c) The directors
acknowledge their
responsibility for:
- ensuring the
company keeps
accounting records
which comply with
section 221; and
-
preparing
accounts which
give a true
and fair view
of the state
of affairs of
the company
as at the end
of the financial
year, and of
its profit or
loss for the
financial year,
in accordance
with the requirements
of section 226,
and which otherwise
comply with
the requirements
of the Companies
Act relating
to accounts,
so far as applicable
to the company.
If
the company chooses,
it may deliver the
un-abbreviated accounts
prepared for its
members. The same
statements must
appear on the un-abbreviated
balance sheet.
5. What
rules apply to dormant
accounts in respect
of financial years
ending before 26
July 2000?
For accounts in
respect of financial
years ending before
26 July 2000, a
dormant company
is required to pass
a special resolution
to exempt itself
from the obligation
to appoint auditors.
The resolution can
be passed (either
at a meeting of
the company or by
written resolution)
at any time after
copies of the accounts
for a financial
year ending before
26 July 2000 had
been sent out to
shareholders. For
more information
on resolutions,
see our booklet,
'Resolutions'.
Some examples of
how to word the
resolution are set
out at the end of
this chapter. Alternatively,
you may complete
Form DEB 8, (or
Acc/6 for companies
registered in Scotland).
These forms are
available from Companies
House. A copy of
the resolution must
be sent to Companies
House within 15
days after the date
it was passed.
The following statement
must appear above
the director's signature
on a dormant company
balance sheet dated
before 26 July 2000:
"The company
was dormant throughout
the financial year".
6.
Can I obtain a standard
form for dormant
accounts from Companies
House?
Yes, although you
do not have to use
it. Form DCA, available
from Companies House,
is for dormant companies
that have not
traded since incorporation.
This form is unsuitable
for companies that
became dormant after
trading. However,
model balance sheets
and notes for all
types of dormant
companies are set
out at the end of
this chapter.
7. How long
do I have to deliver
dormant accounts
to Companies House?
The same time applies
as for all other
accounts. The same
penalties are imposed
for late filing.
See chapter
2.
8. What
happens if my company
starts trading again?
Any company will
cease to be exempt
from audit as a
dormant company
if it:
- begins commercial
or trading activities
during the financial
period; or
- would no longer
qualify for some
other reason.
If
either of these
happened, full accounts
would be required
for the financial
year in which the
company ceased to
be exempt, and the
directors might
need to appoint
auditors for the
company. It may
be that the company
would qualify for
exemptions as a
medium-sized or
small company. More
information about
company audit requirements
and audit exemption
for small companies
is covered in the
chapters 3
and 4
of this booklet.
Question 5
Model Special
Resolution
exempting a dormant
company from the
need to appoint
auditors in respect
of accounts for
financial years
ending before 26
July 2000.
DORMANT COMPANY
RESOLUTION
Company No ______________________
Special Resolution
of
_____________________________________________________
Limited
At a general meeting
of the above company
held on...........
the following resolution
was passed.
(Either)
The company, having
been dormant since
formation, resolves
to make itself exempt
from the provisions
of Part VII of the
Companies Act 1985
relating to the
audit of accounts
and from the obligation
to appoint auditors.
(Or)
The accounts of
the company for
the financial year
ending ....... having
been sent out in
accordance with
Section 238 of the
Companies Act 1985
and the company,
having been dormant
throughout that
year, resolves to
make itself exempt
from the provisions
of Part VII of the
Companies Act 1985
relating to the
audit of accounts
and from the obligation
to appoint auditors.
SIGNED ___________________________
Director/Secretary
of the company
DATE ______________________
Question
6
Model balance
sheets
to be delivered
to the Registrar
of Companies by
dormant companies
The formats on the
following pages
provide a guide
to the information
you need to include.
These formats are
designed to reflect
all possible assets
and liabilities
that a company may
have but you only
need to include
a particular heading
if there is an amount
other than nil to
be shown.
These
model balance
sheets are
for illustration
only, they
should not
be reproduced
and used
for submission
to Companies
House
If the company
has traded
in a previous
financial
year, bear
in mind
that your
previous
year's balance
sheet will
show the
company's
financial
position
as it was
then. If
there have
been no
accounting
transactions
since, you
could just
be carrying
forward
the figures
from last
year.
|
There are two formats
- marked A and B
- either of which
may be followed.
The content of the
two formats is identical;
they simply present
the balance sheet
headings in a different
order.
The balance sheet
must balance:
- In format A,
net assets must
equate to the
aggregate of capital
and reserves.
- In format B,
assets must equate
to liabilities
(including capital
and reserves as
balancing items).
Each
entry must be an
amount in figures
(not words) or '0.00'.
Companies House
will not accept
any document which
shows 'Nil' where
a figure should
appear.
Each column of figures
must be headed with
the date on which
the current and
previous financial
year ended.
For both formats,
the matters to be
included in the
notes to the balance
sheet, if applicable,
can be found in
Chapter 5, question
8.
When you are preparing
your accounts, please
follow the guidelines
in question 13 of
chapter 2.
The statements to
confirm that the
company was dormant,
which must appear
on the balance sheet,
depend on the date
of the balance sheet:
-
For
balance sheets
dated before
26 July 2000,
the statement
above the director's
signature must
read "The company
was dormant
throughout the
financial year".
A special resolution
not to appoint
auditors must
also be filed
at Companies
House.
-
For
balance sheets
dated on or
after 26 July
2000, the statements
above the director's
signature must
read:
(a) For the
year ended .
. . (date) the
company was
entitled to
exemption under
section 249AA(1)
of the Companies
Act 1985.
(b) Members
have not required
the company
to obtain an
audit in accordance
with section
249B(2) of the
Companies Act
1985.
(c) The directors
acknowledge
their responsibility
for:
- ensuring the
company keeps
accounting records
which comply with
section 221; and
-
preparing
accounts which
give a true
and fair view
of the state
of affairs of
the company
as at the end
of the financial
year, and of
its profit or
loss for the
financial year,
in accordance
with the requirements
of section 226,
and which otherwise
comply with
the requirements
of the Companies
Act relating
to accounts,
so far as applicable
to the company;
There
is no need to pass
a special resolution
not to appoint auditors
in relation to accounts
for financial years
ending on or after
26 July 2000. "
DORMANT
COMPANY BALANCE
SHEET FORMAT A
COMPANY NO. ............................
COMPANY NAME ..........................................
BALANCE SHEET AS
AT ..../..../.......
|
CURRENT
YEAR
|
PREVIOUS
YEAR |
|
A CALLED UP
SHARE CAPITAL
NOT PAID |
XX |
XX |
|
B FIXED ASSETS |
|
I. Intangible
assets |
XX |
XX |
|
II. Tangible
assets |
XX |
XX |
|
III. Investments
|
XX |
XX |
|
________ |
|
|
XXX |
XXX |
| C
CURRENT ASSETS |
|
I. Stocks |
XX |
XX |
|
II. Debtors
|
XX |
XX |
|
III. Investments |
XX |
XX |
|
IV. Cash at
bank & in
hand |
XX |
XX |
|
________ |
|
|
XXX |
XXX |
| D
PREPAYMENTS
AND ACCRUED
INCOME |
XX |
XX |
| E
CREDITORS: AMOUNTS
FALLING DUE
WITHIN ONE YEAR
|
(XX) |
(XX) |
| F
NET CURRENT
ASSETS/ LIABILITIES |
XXX |
XXX |
| G
TOTAL ASSETS
LESS CURRENT
LIABILITIES |
XXX |
XXX |
| H
CREDITORS:AMOUNTS
FALLING DUE
AFTER MORE THAN
ONE YEAR |
(XX) |
(XX) |
| I
PROVISION FOR
LIABILITIES
AND CHARGES |
(XX) |
(XX) |
| J
ACCRUALS AND
DEFERRED INCOME |
(XX)
(XXX) |
(XX)
(XXX) |
|
________ |
| |
XXX |
XXX |
|
________ |
| K
CAPITAL AND
RESERVES |
|
I. Called up
share capital |
XX |
XX |
|
II. Share premium
account |
XX |
XX |
|
III. Revaluation
reserve |
XX |
XX |
|
IV. Other reserves |
XX |
XX |
|
V. Profit and
loss account |
XX |
XX |
|
________ |
| |
XXX |
XXX |
|
________ |
(Insert relevant statement(s)
- see previous page)
Approved by the board
of directors on...............(date)
and
signed on their behalf
by......................(DIRECTOR)
DORMANT
COMPANY BALANCE
SHEET FORMAT B
COMPANY NO: ................................
COMPANY NAME: .............................................
BALANCE SHEET AS
AT ../../....
|
CURRENT
YEAR
|
PREVIOUS
YEAR
|
|
ASSETS |
| A
CALLED UP SHARE
CAPITAL NOT
PAID |
XX |
XX |
|
B FIXED ASSETS |
|
I. Intangible
assets |
XX |
XX |
|
II. Tangible
assets |
XX |
XX |
|
III. Investments |
XX |
XX |
|
|
________ |
| |
XXX |
XXX |
| C
CURRENT ASSETS |
|
I. Stocks |
XX |
XX |
|
II. Debtors |
XX |
XX |
|
III. Investments |
XX |
XX |
|
IV. Cash at
bank & in
hand |
XX |
XX |
|
________ |
| |
XXX |
XXX |
| LIABILITIES |
| A
CAPITAL AND
RESERVES |
|
I. Called up
share capital |
XX |
XX |
|
II. Share Premium
Account |
XX |
XX |
|
III. Revaluation
reserve |
XX |
XX |
|
IV. Other reserves |
XX |
XX |
|
V. Profit and
loss account |
XX |
XX |
| |
XXX |
XXX |
|
|
| B
PROVISION FOR
LIABILITIES
AND CHARGES |
XX |
XX |
| C
CREDITORS |
XX |
XX |
| D
ACCRUALS AND
DEFERRED INCOME |
XX |
XX |
|
________ |
| |
XXX |
XXX |
(Insert relevant statement(s)
- see previous page)
Approved by the board
of directors on...............(date)
and
signed on their behalf
by.......................(Director)
Notes
to the dormant company
balance sheet
The following must
be given as notes
to the balance sheet:
- accounting policies,
including those
relating to depreciation
and diminution
in value of assets;
- authorised share
capital;
-
if
shares of more
than one class
have been allotted,
the number and
aggregate nominal
value of shares
of each class
allotted;
- information
relating to any
redeemable shares
allotted;
- information
relating to any
shares which have
been allotted
during the financial
year;
- information
about fixed assets;
- details of indebtedness;
- basis on which
sums originally
in a foreign currency
have been translated
into sterling;
-
in
respect to every
item above (other
than fixed assets)
the corresponding
amounts for
the previous
year;
- details of any
subsidiary undertakings
and of shares
held in them,
and why group
accounts are not
required;
-
where
the company
has acted as
an agent for
any person,
the fact that
it has so acted
(applies to
accounts in
respect of financial
years ending
on or after
26 July 2000).
In addition, the following
information may have
to be given about
the subsidiary undertakings:
-
details
of any undertakings
in which the
company has
a 'significant
holding', for
example, the
name and address
of the business;
- the name of
the company's
ultimate parent
company, and (if
known) its country
of incorporation;
-
the
names of certain
intermediate
parent companies,
and their countries
of incorporation
or (if not incorporated)
the addresses
of their principal
places of business;
- details of certain
loans, guarantees
and other such
dealings made
by the company
in favour of directors
and others.
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CHAPTER 6
Partnership accounts
The Partnerships
and Unlimited Companies
(Accounts) Regulations
1993 require companies
which are members
of 'qualifying partnerships'
to prepare and attach
accounts of the
partnership to their
own accounts.
1. What
is a qualifying
partnership?
A qualifying partnership
is a partnership
that is governed
by the laws of any
part of Great Britain
if each of the members
is:
(i) a limited company;
or
(ii) an unlimited
company or a Scottish
firm, each of whose
members is a limited
company.
Note
(a) Any reference
to a qualifying
partnership in relation
to a limited partnership
is a reference to
the general partners
only.
(b) Any reference
to a limited company,
an unlimited company,
a Scottish firm
or another partnership
includes any comparable
undertaking formed
under the laws of
another state.
|
The
partnership
regulations
will apply
to most limited
partnerships
that have
limited companies
as their general
partners and
are registered
under the
Limited Partnerships
Act 1907,
as these partnerships
must have
their principal
place of business
in Great Britain
on registration. |
2. What
accounts must the
partnership prepare?
The partnership
must prepare and
have audited accounts
as if it were a
company formed under
the Companies Act
1985 so as to conform
to Part VII of that
Act. The Act has
been amended to
take account of
the circumstances
of qualifying partnerships.
However, the partnership
may take advantage
of regulation 7,
which permits the
accounts to be dealt
with on a consolidated
basis as group accounts
prepared by either:
In
these cases, the
accounts must be
prepared on a consolidated
basis under the
law of the member
state in accordance
with the Seventh
Company Law Directive.
A note must be included
to say that the
accounts have been
prepared to take
advantage of this
regulation.
3. For what
period must the
partnership accounts
be prepared?
The accounts may
cover any period
up to 18 months
which may be specified
in the partnership
agreement. If a
period is not specified
in the agreement,
the partnership
accounts must be
drawn up for each
12-month period
ending on 31 March
in each year.
4. When
must the accounts
be prepared?
The partnership
accounts must be
prepared within
a period of 10 months
after the end of
the financial year.
5. When
must the accounts
be delivered or
published?
When partnership
accounts are prepared,
they must be attached
to the next accounts
of each partner
that is a limited
company and delivered
to Companies House.
A limited company
that is a member
of a qualifying
partnership must
supply to any person
on request:
-
the
name of each
partner required
to deliver copies
of the partnership
accounts to
the Registrar;
and
-
the
name of each
partner incorporated
in another EEA
member state
who is required
to publish the
partnership
accounts in
that state.
When a qualifying
partnership has its
head office in Great
Britain and each of
the partners is:
-
an
undertaking
comparable to
a limited company
incorporated
outside the
United Kingdom
or other EEA
state; or
-
an
undertaking
comparable to
an unlimited
company or partnership
formed under
the law of such
a country with
each of its
members a limited
or comparable
undertaking;
then
the
partnership must:
(a) make the latest
accounts of the
partnership available
for inspection by
any person, without
charge, during business
hours at the head
office of the partnership,
together with a
certified translation,
if the original
is not in English;
and
each member of the
partnership must:
(b) supply to any
person on request
a copy of the latest
accounts of the
partnership (together
with a translation
if the original
is not in English).
A fee may be charged
to cover the administrative
cost of supplying
the copy, but no
more.
6. Are there
any exemptions from
the publication
rules?
The members of a
qualifying partnership
may be exempted
from the above publication
rules if the partnership
accounts are consolidated
as group accounts
prepared by:
- a member of
the partnership
formed under the
law of a member
state; or
- a parent undertaking
of such a member
so established.
In
this case the consolidated
accounts must be
prepared and audited
under the law of
the member state,
and the notes to
the accounts must
show that advantage
has been taken of
this regulation.
If this exemption
is used, any member
of the partnership
must disclose on
request the name
of at least one
member or parent
undertaking in whose
group accounts the
partnership accounts
are consolidated.
7. Are there
any penalties for
non-compliance?
Yes. Every partner
in a qualifying
partnership or every
director of a company
that is a partner
may be prosecuted
and fined up to
£5,000.
Back
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CHAPTER 7
Further information
1.Where
do I get forms and
guidance booklets?
This is one of a
series of Companies
House booklets which
provide a simple
guide to the Companies
Act.
Statutory forms
and guidance booklets
are available, free
of charge from Companies
House. The quickest
way to get them
is through this
website or by telephoning
0870 3333636.
If you prefer you
can write to our
stationery sections
in Cardiff or Edinburgh.
Forms can also be
obtained from legal
stationers, accountants,
solicitors and company
formation agents
- addresses in business
phone books.
2. How do
I send information
to the Registrar?
You may deliver
documents to the
Registrar by hand
(personally or by
courier), including
outside office hours,
bank holidays and
weekends to Cardiff,
London and Edinburgh.
You may also send
documents by post
or by the Hays Document
Exchange service
(DX). If you send
documents, please
address them to:
For
companies incorporated
in
England & Wales: |
For
companies incorporated
in
Scotland: |
The
Registrar of
Companies
Companies House
Crown Way
Cardiff CF14
3UZ
DX33050 Cardiff
|
The
Registrar of
Companies
Companies House
37 Castle Terrace
Edinburgh EH1
2EB
DX ED235 Edinburgh
1 |
We will only acknowledge
receipt of documents
at Companies if you
provide a stamped
addressed envelope.
| Please
note: Companies
House does not
accept accounts
or any other
statutory documents
by fax. |
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