Introducing Abridged Accounts – Changes affecting Small Companies

following changes in UK company law, the option for small companies to file an abbreviated version of their full accounts with Companies House was removed. This affects companies that accounting period began on or after 1 January 2016.

The new option that has been introduced by the Companies, Partnerships and Groups (Accounts and reports) Regulations 2015 is that of Abridged Accounts. However, there is still certain criteria that needs to be met in order to file these.

A Small Company must meet at least 2 of the following:

• Have a turnover of no more than £10.2 million
• Balance sheet total that does not exceed £5.1 million
• The average number of employees is no more than 50

It is no longer possible for a Small Company (or a Medium Sized Company as defined by Companies Act 2006) to produce abbreviated accounts. This means that these companies must prepare and file the same set of accounts for its members as for the public record.

Small Companies must decide at the point of preparing their accounts whether they wish to abridge them or not (or prepare micro entity accounts of they are within the relevant thresholds). Micro Entities have their own accounting regime and the form of abridged accounts they prepare are not the same as for Small Companies. In particular, they do not require shareholder consent.

Abridged accounts contain a reduced set of information when compared to full accounts. They will contain a balance sheet that has a sub-set of the information that is included in the full balance sheet. For example there is no breakdown of debtors into trade debtors, other debtors etc or of creditors into bank loans, trade creditors etc. Likewise there will be a sub-set of information in the profit and loss account that is included in the full profit and loss account, they will not provide numbers for cost of sales, turnover etc. The full requirements for Small Company abridged accounts and the relevant balance sheet formats can be found in the Small Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015.

As unanimous shareholder consent is necessary for the preparation of abridged accounts, a statement is required to be made and delivered to the Registrar to indicate that the members have agreed to the abridgement. Members may only give consent in respect of the preceding financial year. If the company wishes to prepare abridged accounts on an on-going basis. It must obtain unanimous shareholder consent each year, a rolling consent is not permitted. Abridged accounts must be identified as such to the Registrar at Companies House.

In order for these accounts to be filed there are a number of documents that need to be completed so that consent can be obtained and confirmation issued to Companies House.

We offer an Abridged Accounts pack that includes all the templates that are required to obtain this consent.

It can be purchased as either a single pack for £75.00 - https://www.companypolicy.co.uk/abridged-accounts-pack

Or it is included within our Company Secretary Executive Pack which includes all the guidance and templates a limited company will require to allow it to stay complaint with Companies House and HMRC. It is currently priced at £400.00 and this includes our annual update service that makes sure you stay compliant - https://www.companypolicy.co.uk/company-secretary-executive-pack