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What are the changes?

The filing options available to limited companies and limited liability partnerships (LLPs) when filing accounts with the Registrar of Companies have been impacted by the UK implementation of the EU Accounting Directive. Changes have been made to UK company law by The Companies, Partnership and Groups (Accounts and Reports) Regulations 2015 and The Limited Liability Partnerships, Partnerships and Groups (Accounts and Audit) Regulations 2016. The new regulations are generally effective for financial years beginning on or after 1 January 2016, with early adoption permitted for financial years beginning on or after 1 January 2015.

What size is my company or LLP?

There are four sizes of company to consider when preparing and filing accounts: micro-entity, small, medium-sized and large. The process for determining the appropriate size category can be broadly divided into three key steps:

  • Review the nature of the company to identify exclusions
  • Review the group considerations
  • Check the size limits

This process remains unchanged under the new regulations. However, there are changes to the types of entity excluded from, and the size limits for, the micro, small and medium-sized categories. Please contact your usual Kreston Reeves adviser if you have any doubts over the size of your company or group going forward.

What are my filing options?

The filing options for financial years beginning on or after 1 January 2016 are as follows for qualifying companies (or where the new regulations are adopted early – an entity is required to apply all the provisions rather than pick and choose):

Micro-entity

  • For accounts prepared in accordance with FRS 105 only the balance sheet, including the information disclosed at the foot, needs to be filed at Companies House. It is not necessary to file the profit and loss account, or where relevant, the directors’ report. There is no longer a requirement to prepare a directors’ report
  • A micro-entity can opt to prepare and file accounts in accordance with the small companies regime (see below)

Small

  • Accounts can be prepared in accordance with full FRS 102, FRS 102 Section 1A – Small entities, FRS 102 (reduced disclosure framework where part of a group) or FRS 101 (the reduced disclosure framework for subsidiaries of groups reporting under International Financial Reporting Standards (IFRS))
  • No longer have the option to file an abbreviated version of the full accounts (as prepared for members)
  • Abridged balance sheet and profit and loss account option available where the members have consented to the abridgement (must deliver a statement to the Registrar of Companies to confirm that all the members have consented)
  • Irrespective of whether a small company prepares full or abridged accounts for its members, it will still have the option not to file a copy of the profit and loss account or the directors’ report at Companies House (known as “filleted” accounts). If a small company chooses not to file the profit and loss account, the balance sheet delivered to the Registrar of Companies must disclose that fact

Medium-sized

  • Accounts can be prepared in accordance with full FRS 102, FRS 102 (reduced disclosure framework where part of a group) or FRS 101
  • Abbreviated accounts have been withdrawn (although rarely filed in practice)

Large

  • Accounts can be prepared in accordance with full FRS 102, FRS 102 (reduced disclosure framework where part of a group) or FRS 101
  • Listed companies must prepare and file their consolidated accounts in accordance with IFRS as adopted by the EU (single entity accounts can be prepared in accordance with FRS 102, FRS 101 or IFRS)

Where is my audit report? – Small companies only

It is important to note that under the new regulations, a small company may file the audit report (where applicable) only when it has chosen to file a copy of the profit and loss account.

Therefore, if a small company that is subject to audit chooses not to file the profit and loss account, the notes to the balance sheet filed at Companies House must disclose:

  • whether the auditor’s report was qualified or unqualified;
  • if qualified, disclosure of the basis of the qualification;
  • if unqualified, reference to any matters to which the auditor drew attention by way of emphasis; and
  • the name of the auditor and the senior statutory auditor

Please therefore consider before opting to file filleted accounts whether the members are happy not to have an auditor’s report attached.

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