If you run a limited company, you will be required to submit various reports to Companies House and HMRC. This can be tricky, especially with the recent changes to accounts filing requirements over the past few years. So to help you prepare the right ones under the new legislation, here is a quick guide telling you everything you need to know.
Be aware of the most recent changes
Maybe not so recent but worth a mention is that, since 1st January 2016, UK company law has removed the option for small companies to file an abbreviated version of their full accounts. In short, abbreviated accounts have been abolished but small companies and LLPs can still take advantage of certain reduced filing options in the form of abridged accounts instead.
Another big change in recent years is that ‘the confirmation statement’ has replaced annual returns. Find out more about that below.
Main Reports Required
The following is a brief overview of the main reports required and what they should contain.
If you are a small limited company, a micro-entity or dormant, you may be entitled to file simpler (‘abridged’) accounts to Companies House. The current criteria (as of 2016) for a small company is that you must meet at least two of the following conditions:
- Annual turnover must be no more than £10.2 million
- Balance sheet total must be no more than £5.1 million
- Average number of employees must be no more than 50
Although companies must now prepare and file the same set of accounts for its members as for the public record (which it didn’t previously), the advantage of abridged accounts is that they can be sent to Companies House and they can be used as an exemption so that your company’s accounts do not need to be audited.
Other important things to note with abridged accounts is that:
- You can only send them if all your company members agree to it
- They must contain a simpler balance sheet (along with any notes) which has the name of a director printed on it and that is signed by a director.
- You can choose to include a simpler profit and loss account and a copy of the director’s report (accounts without these are referred to as ‘filleted accounts’).
These accounts should be filed with Companies House 9 months after the year-end and can be filed online or sent by post.
Note: The exemptions that are availed by small companies can also be availed by micro-entities. They are only required to file a copy of their balance sheet along with a small number of notes; they are not required to file a director’s report or a profit and loss account. See micro-accounts for more information.
Statutory/Full Members Accounts
Statutory accounts are required by law and all private limited companies are required to prepare these at the end of each financial year, meeting certain preparation standards (IFRS or UK GAAP). These accounts are a much more detailed version of abridged accounts and will include:
- A balance sheet – which shows the value of everything the company owns, owes and is owed on the last day of the financial year.
- A profit and loss account – which shows the company’s sales, running costs and the profit or loss it has made over the financial year
- Notes about the accounts
- A director’s report – unless you’re a ‘micro-entity’
- An auditor’s report – if you’re bigger than a small company
Full accounts should be produced at the same time as your abridged accounts and sent to Companies House, Shareholders, the HMRC with the company’s corporation tax return, and potentially your bank manager. If you are a small company, you may just keep them internally for the management team to view the performance of the company.
The Confirmation Statement
The annual confirmation statement, introduced on the 30th June 2016, has replaced annual returns but serves the exact same purpose in a more simplified format. Every 12 months, a company needs to file a confirmation statement to verify that important company data registered at Companies House and displayed on the public register is accurate and up to date.
Unlike annual returns, with a confirmation statement, you have the option to ‘check and confirm’ that the information is correct if there have been no changes in the last 12 months. This removes the need for filing identical information as you can just review and confirm. Another notable difference is that in your first confirmation statement you’ll also need to include the information held in your people with significant control (PSC) register.
Filing this statement is straightforward and you will need to pay a filing charge each year to Companies House, which is currently £13 online or £40 for the postal option. Unlike with annual returns, you can update your information multiple times throughout the year and it’s included in the annual fee.
It is important to file this return, otherwise, Companies House may start the process of dissolving your company, which could freeze your bank accounts.
These are a software-generated version of the full accounts that are required for submission with your corporation tax return.
Corporation Tax Return
This needs to be submitted 12 months after the year-end to HMRC and confirms the corporation tax calculation. Payment is due before submission, which is 9 months and 1 day after year-end.
This needs to be filed electronically and the iXBRL accounts should accompany the submission.
Using a small business as an example, when it comes to filing their accounts, they have 4 options:
- To prepare micro-entity accounts – if within the threshold
- To prepare abridged accounts
- To prepare filleted accounts – abridged accounts omitting the profit and loss account and related notes and/or the Director’s report
- To prepare full statutory accounts
Do I Need An Accountant To Help Me With This?
You are not required by law to have an accountant prepare or sign these accounts/reports. If you have experience and expertise in preparing these reports you can prepare them yourselves. However, if you aren’t sure about what you are doing, it is a good idea to engage an accountant to prepare these correctly as mistakes can be very costly!