Medium sized company accounts

A medium sized company can prepare accounts according to special provisions applicable to medium sized companies. The benefit of preparing accounts according to medium sized company rules is that company can choose to disclose reduced information in the accounts for public record.

Medium-sized company criteria

Generally, your limited company must meet at least two of the following conditions in order to be eligible to prepare and submit medium sized company accounts.

Threshold
Annual salesNot more than £36 million
Balance sheet totalNot more than £18 million
Average number of employeesNot more than 250

Company cannot prepare and submit medium-sized company accounts

Your company cannot be treated as a medium sized company if it is, or was at any time during the financial year, one of the following:

  • A public limited company.
  • A company that has permission under Part 4 of the Financial Services and Markets Act 2000 to carry on a regulated activity or that carries on an insurance market activity.
  • A member of an ineligible group.

On the same note A group is ineligible if any of its members is:

  • A public limited company.
  • A body corporate (other than a company) whose shares are admitted to trading on a regulated market.
  • A person (other than a small company) who has permission under Part 4 of the Financial Services and Markets Act 2000 to carry on a regulated activity.
  • A small company that is an authorised insurance company, a banking company, an e-money issuer, a MiFID (ie Markets in Financial Instruments Directive) investment firm or a UCITS (i.e.Undertakings for Collective Investment in Transferable Securities) management company.
  • A person who carries on insurance market activity.

Qualifying as a medium-sized company every year

Your company qualify as medium sized company in your first accounting period if you fulfil the conditions in that period. In any subsequent period your company must fulfil the conditions in that period and the period before.

However if your company which qualified as medium sized in one period no longer meets the criteria in the next period, you may continue to claim the exemptions available for the following period. Thereafter if your company then reverts back to being medium sized by meeting the criteria the exemption will continue uninterrupted.

Contents of medium-sized company accounts

In summary your Medium sized company accounts must include:

  • Profit and loss account.
  • Balance sheet, showing the printed name and signature of a director.
  • Disclosure notes to the accounts.
  • Group accounts (if appropriate).
  • Directors’ report including a business review (or strategic report) showing the printed name of the approving secretary or director.
  • Auditor’s report that includes the name of the registered auditor unless the company is exempt from audit.

Your medium-sized company must deliver all of the constituent parts of your company accounts to Companies House.

Medium sized company exemptions

Your medium-sized company may omit certain information from your business review or strategic report in your directors’ report. This includes analysis using key performance indicators so far as they relate to non-financial information.

Medium sized company which is part of an ineligible group can still take advantage of the exemption from disclosing non-financial key performance indicators in your business review or strategic report.

Medium-sized company preparing accounts according to Companies Act may omit disclosure with respect to compliance with accounting standards and also the related party transactions from your company accounts send to their members.

Your company may also choose to deliver a slightly reduced information of the profit and loss account. Please refer to regulation 4 of The Large and Medium sized Companies and Groups Accounts and Reports Regulations 2008 for further information.

Some subsidiary company may be exempt from audit where they meet certain conditions for financial years ending on or after 1 October 2012.

Medium sized groups

There are no special rules for medium sized groups. Your medium sized parent company must prepare group accounts and deliver them to Companies House.

Remember to deliver your company accounts on time to Companies House to avoid late filing penalty.

HMRC telephone helpline

HMRC telephone helpline if you have any questions about your corporation tax, self assessment, VAT, PAYE and payroll compliance, tax credits and so on.

HMRC stands for HM Revenue and Customs. They are the official Tax Authority in the United Kingdom. HMRC provide dedicated telephone helpline for specific tax related subject matters to help businesses and companies to deal with their tax matters efficiently.

Ensure you dial the correct numbers to avoid being transferred from department to department to reach the right person to speak to.

For general help, you may tweet with @HMRCcustomers.

HMRC department contact details

HMRC DepartmentTel Helpline
Self Assessment general enquiriesTelephone:
0300 200 3310
Textphone:
0300 200 3319
Outside UK:
+44 161 931 9070

Postal:
Self Assessment
HM Revenue and Customs
BX9 1AS
United Kingdom
Tax credits general enquiriesTelephone:
0345 300 3900
Textphone:
0345 300 3909
Outside UK:
+44 02890 538 192

Postal:
Complaints or change of circumstances
Tax Credit Office
HM Revenue and Customs
BX9 1LR
United Kingdom

New tax credit claims
Tax Credit Claims
HM Revenue and Customs
BX9 1HE
Child benefit general enquiriesTelephone:
0300 200 3100
Textphone:
0300 200 3103
Outside UK:
+44 161 210 3086

Postal:
HM Revenue and Customs
Child Benefit Office
PO Box 1
Newcastle Upon Tyne
NE88 1AA
United Kingdom
Income tax general enquiries and Marriage AllowanceTelephone:
0300 200 3300
Textphone:
0300 200 3319
Outside UK:
+44 135 535 9022

Postal:
Pay As You Earn and Self Assessment
HM Revenue an Customs
BX9 1AS
United Kingdom
National Insurance general enquiriesTelephone:
0300 200 3500
Textphone:
0300 200 3519
Outside UK:
44 191 203 7010

Postal:
PT Operations North East England
HM Revenue and Customs
BX9 1AN
United Kingdom
Employers general enquiriesTelephone:
0300 200 3200
Textphone:
0300 200 3212
Outside UK:
+44 151 268 0558
Fax:
03000 523 030

Postal:
PT Operations North East England
HM Revenue and Customs
BX9 1BX
United Kingdom
VAT general enquiriesTelephone:
0300 200 3700
Textphone:
0300 200 3719
Outside UK:
+44 2920 501 261

Postal:
HM Revenue and Customs
VAT Written Enquiries Team
Portcullis House
21 India Street
Glasgow
G2 4PZ
United Kingdom
Construction Industry Scheme general enquiriesTelephone:
0300 200 3210
Textphone:
0300 200 3219
Outside UK:
+44 161 930 8706

Postal:
PT Operations North East England
HM Revenue and Customs
BX9 1BX
United Kingdom

Courier documents to HMRC

Lastly, if you are going to use a courier service to deliver your documents to HMRC with PO Box and BX postcodes.

Please use the address below instead:

HM Revenue and Customs
Benton Park View
Newcastle Upon Tyne
NE98 1ZZ
United Kingdom

HMRC online service

Broadly, HMRC has dedicated technical support helpline to help with any filing problems you face.

If you have any technical issues please call 0300 200 3600. The number for textphone is 0300 200 3603. If you are calling from outside the United Kingdom call +44 161 930 8445.

Corporation tax

Limited company is required by law to pay corporation tax on their profit. The HM Revenue and Customs (HMRC) will send reminders requesting filing of your CT600. The reminders would be sent to your registered office. What is CT600? Good question. It is effectively a corporation tax return form. HMRC called it CT600.

Before anything else, you must first prepare your company accounts. This would include the profit and loss account which gives you the profit figure to compute your tax liability. However, if you made a loss, then no tax liability. In simple term, no profit mean no tax to pay.

You have nine after your accounting year end to pay your company tax. Thereafter, you must submit your corporation tax return together with your tax computation to HMRC. You must also include your company accounts. You have 12 months after the accounting year ended to state your final corporation tax bill in your CT600.

Otherwise, your company will received late filing penalty if failed to file the return on time. There will also be penalty interests on any outstanding corporation tax amount.

Corporation tax for Large Company

A company with an accounting profit of more than £1.5 million is classified as large company by HMRC and therefore is required to pay its corporation tax in advance in four installments within a twelve-month period.

There is an exception. Where your company’s accounting profit exceeded £1.5 million but less than £10 million for the first time in your trading year, your company will not have to pay your corporation tax by installments.

Where there are associated companies or companies within a group, that £10 million threshold will be divided by one plus the number of associates at the end of the previous accounting period.

Accounting records

The onus is on your company to estimate your accounting profits for the purpose of making corporation tax payments. Therefore, it is important your company to have a proper accounting system in place to monitor your profits and business transactions.

Notify HMRC when your company profit is likely to exceed the thresholds. Start making quarterly installment payments. The unpaid installment payments carry penalty interest at a special rate imposed by HMRC, from the due date to the date of payment.

Oversight

There is no excuse for first time oversight. The HMRC will back date the penalty interest payable based on your final corporation tax return CT600 submitted.

Quarterly Instalments Payments

Installments are due at the intervals of three months commencing 6 months and 13 days from the start of your accounting period and culminating 3 months and 14 days from its end.

Therefore, for 12 month accounting period there will be 4 installments.

For a company with a 12 month accounting period starting on 1 January, Quarterly Installment Payments will be due on 14 July, 14 October, 14 January and 14 April.

Submit company accounts on paper

Limited company may submit their company accounts on paper to Companies House. Above all, your company accounts must arrive Companies House offices on time. Preferably well before your company’s filing due date. This is because your company will not be given any extra time if your accounts are rejected. As a result you would get a late filing penalty even your accounts just late by one day.

Company name and number

Your company name and number must appear on your company accounts documents such as your directors’ report or balance sheet. The name and number may also be shown on any cover sheet delivered with your accounts.

Signatory on company accounts documents

Your company accounts must meet the following requirements:

  • Director must sign on behalf of your board of directors and have his/her name printed on your balance sheet page.
  • Your directors’ report must include the printed name of your director or company secretary who signed the report.
  • if your company accounts include your auditor’s report, your auditor’s report must state your auditor’s name.

Please note that a legible signature on a balance sheet will not satisfy the additional requirement for a printed name. Companies House will reject any accounts that do not meet the above requirements. So it is important to check before submit your company accounts on paper.

Senior statutory auditor

Where your auditor is a firm, your auditor’s report must state the name of the auditor and the name of the person who signed it as the senior statutory auditor on behalf of the firm.

How to avoid late filing penalty

How to avoid late filing penalty is simple. As you already know every limited company must file their accounts by due date. For this reason, all you need to do is to find out when is your due date and plan backward.

On the other hand, if you are not sure when is your company’s accounts filing due date, use Companies House Web check service to check or ask your accountant.

Ordinarily, Companies House will issue late filing penalty if your company accounts were submitted late. You must pay the penalty and no excuse unless your circumstance is exceptional.

Avoid late filing penalty

Principally, your company director has a duty to ensure your company accounts are delivered to Companies House on time.

For instance, a private limited company (LTD) is allowed to file their company accounts with Companies House within nine months after the accounting year ended. Whereas a public limited company (PLC) has six months to deliver their company accounts.

Guaranteed royal mail service

First of all, if your company filing deadline is next day. With this in mind, you may like to consider using guaranteed next day delivery post service.

First thing to remember the first class mail in the UK does not guarantee next day delivery. You will get late filing penalty if your company accounts reach Companies House late even by just one day. The penalty is £150 if your company is a limited company and for a public company you will receive a £750 penalty notice.

Accounts rejected by Companies House

In circumstance where you delivered your company accounts on time but later your account was rejected. For example, your director has not signed the balance sheet page. In other words, your company accounts do not meet the requirements of the Companies Act 2006. Later, you resubmit your accounts with Companies House and this time you already passed the due date. In this situation, you will receive late filing penalty. Thus, you must allow contingency plan for this kind of unforeseen situation.

Reminders for yourself

If you already know your company accounts filing deadline, mark your company accounts filing deadline in your diary or smartphone calendar. Set alert to remind yourself and to allow ample of time to prepare your company accounts and submit with Companies House.

Reminders from Companies House

Generally, Companies House sends out reminders to your company registered office address. Practically, you must act on reminders from Companies House promptly.

Besides, HM Revenue and Customs also send important letters to your company registered office. Usually, they require your directors must take some form of actions relating to your company tax affairs.

On the other hand, if you are unable to access mails sent to your company’s registered office address. Thus, it is time to change it. At the same time, you must notify Companies House of your new registered office address within 14 days accordingly.

Pay penalty by installment

Pay late filing penalty by installment is possible to arrange if your company is unable to pay the late filing penalty outright. Write to Companies House with your proposed late filing penalty installment payment plan. You must explain why you unable pay the late filing penalty.

Companies House will then review your proposal and will let you know if they approve your request.

How to pay late filing penalty by installment

You may pay your late filing penalty by cheque and by bank transfer. If you are paying your late filing penalty by cheque make sure you send your cheque to the correct Companies House office.

For example, Companies registered in England must send your cheque to Companies House in Cardiff. Do the same for companies registered in Wales and Northern Ireland.

Don’t pay what would happens

Most importantly, you must not ignore your late filing penalty just because you don’t have the money to pay outright. This is because Companies House will escalate your case to a debt collector and enforce the payment through court. This will become even more expensive for you later.

We live and we learn. Pay your late filing penalty by installment. Get it done and over with.

Avoid late filing penalty

You can avoid late filing penalty. All you have to do is to deliver your company accounts on time to Companies House. You will only get late filing penalty when your accounts were late even just by one day.

Audit Exemption for subsidiary

In certain circumstances your subsidiary may claim audit exemption if your parent company is established under the law of an European Economic Area (EEA) state.

You must submit the following documents to Companies House to claim the exemption. And the documents must reach Companies House before the date on which your company accounts are due.

  • A written notice that all members of the subsidiary company agree to the exemption in respect of the relevant financial year.
  • The completed Companies House form AA06. This is the statement of guarantee by a parent undertaking of a subsidiary company in respect of the relevant accounting year. The law supports this is the section 479C of the Companies Act 2006.
  • A copy of your parent undertaking’s consolidated accounts. This includes a copy of the auditor’s report and the annual report on those accounts.

Your Parent’s consolidated accounts must consolidate your subsidiary accounts either for the relevant financial year or to an earlier date in the same financial year. Another thing is your parent undertaking must also disclose in the notes to their consolidated accounts that your subsidiary is exempt from auditing their accounts. This includes the law which it relies on which is the section 479A of the Companies Act 2006.

Your parent’s consolidated accounts must also show your subsidiary company’s name and registered number in a prominent place on the document.

Take note that the audit exemption will only be available if your subsidiary company’s financial year ends on or after 1 October 2012.

Company not allowed to claim audit exemption as a subsidiary

In short your subsidiary is not entitled to audit exemption if it was at any time within the relevant financial year, it is a:

  • Quoted company.
  • Company that is an authorised insurance company, a banking company, an e-Money issuer, a MiFID investment firm or a UCITS management company.
  • Company that carries on insurance market activity.
  • Special register body as defined in section 117(1) of the Trade Union and Labour Relations (Consolidation) Act 1992 (c 52) or an employers’ association as defined in section 122 of that Act or Article 4 of the Industrial Relations (Northern Ireland Order 1992 (S.I. 1992/807 (NI 5).

The Companies House form AA06

Your statement of guarantee must present the following information.

  • Registered name and number of your subsidiary.
  • Your subsidiary’s financial year to which the guarantee relates.
  • The statement date.

You must also include the details of the section of the Companies Act 2006 under which the guarantee is being given. For examples,

  • Section.394c – exemption from preparing accounts for a dormant subsidiary.
  • Section.448c – exemption from filing accounts for a dormant subsidiary.
  • Section.479C – audit exemption for a subsidiary undertaking.

In addition, you must also provide the name of your parent undertaking such as if the parent was incorporated in the UK, its registered name and registered number. In the case of if the parent was incorporated and registered (in the same country) elsewhere in the EEA, its registered name, registration number and the identity of the register where it is registered.

The Effect of the guarantee and when it takes effect

In effect the parent undertaking guarantees all outstanding liabilities that your subsidiary is subject to at the end of the financial year. The guarantee takes effect when it is delivered to Companies House. It remains in force until all of the liabilities have been satisfied.

Audit exemption compliance

For example, your balance sheet in your individual company account must include an audit exemption statement to the effect that. This is as follows.

  • For the year ending (dd/mm/yyyy) the company was entitled to exemption from audit under section 479A of the Companies Act 2006 relating to subsidiary companies.
  • The members have not required the company to obtain an audit of its accounts for the year in question in accordance with section 476.
  • The directors acknowledge their responsibilities for complying with the requirements of the Act with respect to accounting records and the preparation of accounts.

Seek accountants help if you are not familiar with consolidation of group accounts. Companies House may seek clarification on your subsidiary filing.

Company accounts

Send your subsidiary company accounts on time to Companies House. Otherwise you would receive automatic late filing penalty even if your accounts just late by one one. The penalty starts from £150 to £1500 depending how late.

However you can avoid late filing penalty. Start preparing your accounts soon after the year end. With this would allow ample time for filing.

Companies House may strike off company with long overdue accounts. They usually send reminders to your registered office. If there is no response from you then they would initiate the proposal to strike off. Write to Companies House if you would still like to keep your company and state your reasons. Companies House will response to your request whether they approve. If they do, you must comply to their specified deadline.

Confirmation statement

Another document you must send to Companies House every year is the confirmation statement. This document would have nothing to do with your company performance or your profit and loss or your balance sheet. It is a statement to confirm that your company information is still valid as at your confirmation statement due date.

Authentication code

You can file your confirmation statement online or on paper. You would require your authentication code to file online. The code is the electronic equivalent of your company director’s or secretary’s signature. Therefore do not share your code with anyone and always keep it safe..

Do not worry if you have misplaced or someone has got hold of your authentication code. If you have misplaced your code request it again from Companies House. It takes 5 working days for the code to arrive at your registered office.

If you cannot get your letter sent to your registered office you must change your registered office. After that request the code again.

Companies House would not send your code to anywhere else. No matter how hard you try to persuade them. They would just say no. They just do what the law says.

On one hand if someone has your code. It is possible to change it. You can do so using the webfiling service. You can reset your code there.

It is imperative you file your confirmation statement on time too. This is to avoid Companies House dissolve your company. Once your company has been dissolved, you would have to restore it if you still like to keep it.

Small company accounts

Limited company may prepare and submit small company accounts with Companies House if your company meet the criteria of a small company according to special provisions in the Companies Act 2006 and the relevant regulations. This means you can choose to disclose less information in your company accounts compared to that of a medium-sized or a large company.

Criteria to qualify as a small company

To qualify your limited company must meet at least two of the following conditions:

After 01 Jan 2016Before 01 Jan 2016
TurnoverMust not exceed £10.2 millionMust not exceed £6.5 million
Balance sheet totalMust not be more than £5.1 millionMust not be more than £3.26 million
Average employeesNot more than 50Not more than 50

Company cannot prepare and submit small company accounts

Your company cannot prepare and submit small company accounts with Companies House if one of the following event has took place. Your company are, or was at any time during the financial year:

  • A public limited company
  • A member of an ineligible group (see below)
  • An authorised insurance company, a banking company, an e-money issuer, a MiFID (i.e. Markets in Financial Instruments Directive) investment firm or a UCITS (ie Undertakings for Collective Investment in Transferable Securities) management company or carried on insurance market activity

A group is ineligible if any of its members is:

  • A public limited company
  • A body corporate (other than a company) whose shares are admitted to trading on a regulated market in an EEA State
  • A person (other than a small company) who has permission under Part IV of the Financial Services and Markets Act 2000 to carry on a regulated activity
  • A small company that is an authorised insurance company, a banking company, an e-money issuer, a MiFID investment firm or a UCITS management company
  • A person who carries on insurance market activity

Above all, financial services companies are regulated by the Financial Conduct Authority.

Eligible to deliver small company accounts every year

Generally, your company is qualified to deliver small company account in first accounting period if you fulfill the conditions in that period. In any subsequent periods your company must fulfill the conditions in that period and the period before that.

On one hand If your company qualified as small in one period no longer meets the criteria in the next period, you may continue to claim the exemptions available for the next period. If your company then reverts back to being small by meeting the criteria for the following period, the exemption will continue uninterrupted.

Conditions to qualify as a small group of companies

Basically your company must meet at least two of the following criteria:

After 01 Jan 2016Before 01 Jan 2016
Aggregate turnoverNot more than £10.2 millionNot more than £6.5 million
Aggregate balance sheet totalNot more than £5.1 millionNot more than £3.26 million
Aggregate average number of employeesNot more than 50Not more than 50

Contents of small company accounts

Generally your small company accounts must include:

  • A profit and loss account.
  • A balance sheet, signed by a director on behalf of the board and the printed name of that director.
  • Disclosure notes to the accounts.
  • Group accounts (if a small parent company chooses to prepare them).
  • A directors’ report that shows the signature of a secretary or director and their printed name.
  • An auditors report that includes the printed name of the registered auditor unless your company qualifies for audit exemption.

Without reservation your balance sheet must contain a statement in a prominent position above your director’s signature and printed name that your company accounts have been prepared in accordance with the special provisions applicable to companies subject to the small companies’ regime.

On the same note, your company do not have to deliver a copy of the directors’ report or the profit and loss account to Companies House. However, if you opt not to deliver the profit and loss account your company must state this fact on the balance sheet. Otherwise you only deliver a signed balance sheet with disclosure notes to Companies House.

For further reading the requirements for companies subject to the small companies’ regime are set out in Parts 15 and 16 of the Companies Act 2006.

Small company abridged accounts

The Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015 introduced the concept of abridged accounts.

Abridged accounts contain a balance sheet that contains a sub-set of the information that is included in a full balance sheet. Likewise, the profit and loss account may also contain a sub-set of the information that is included in a full profit and loss account.

Companies must now prepare and file the same set of accounts for its members as for the public record. This means that your company will decide at the point you are preparing your accounts whether or not to abridge them (or to prepare micro entity accounts). Previously your company would prepare full accounts for your members and would then decide whether or not to abbreviate them for the public record.

If you opt to file an abridged balance sheet and/or profit & loss account then you must include a statement on the balance sheet that the members have agreed to the preparation of abridged accounts for this accounting period in accordance with section 444(2A).

Small companies preparing International Accounting Standards accounts must deliver a full balance sheet to Companies House.

Small company abbreviated accounts

The Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015 abolished abbreviated accounts. This means that abbreviated accounts cannot be prepared and filed with Companies House after 1 January 2016.

Other small company exemptions

The Companies Act 2006 and regulations also set out what the directors’ report of a small company must contain. Your director report does not have to contain a business review (or strategic report) or a statement as to the amount that your directors recommend be paid by way of dividend. If your company has taken advantage of the small companies’ exemption in preparing your directors’ report it must contain a statement above your director’s or secretary’s signature and printed name to that effect.

Your small company may also claim exemption from audit. In this circumstance, you may submit unaudited company accounts.

Your small company which has chosen to not file your profit and loss account may also opt not to file a copy of your auditor’s report on your accounts. In this instance, you must make the following disclosures in the notes to your company accounts: your auditor’s name (if your auditor was a firm, the name of the senior statutory auditor), to state whether your auditor’s report was qualified or unqualified, and, if your audit report was qualified, what the qualification was.

Special rules for small groups

A parent company which qualifies as small need not prepare group accounts or submit them to Companies House if the group is small and not ineligible. If your small parent company decides to prepare group accounts your content is prescribed by the Companies Act 2006 and by Schedule 6 to the Small Companies and Groups (Accounts and Directors’) Report Regulations 2008.

If you prepare group accounts you must include a statement above the printed name and signature of your directors on the balance sheet, confirming that your accounts are prepared in accordance with the provisions applicable to companies subject to the small companies’ regime.

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