Penn Accounts

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• Introduction
• Setting Up a Company
• Types of Company
• Forming a Company
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• Company Officers
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• Directors Responsibilities
• Annual Accounts
• SMB Exemptions
• Audit Exemptions
• Dormant Companies
• Format of the Accounts
• Taxation
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Annual Accounts

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 above - or a date up to seven days either side of the ARD, if this is more convenient.

For a new company, the ARD is set using its date of incorporation - see above. For a first set of accounts, 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.

All limited and unlimited companies, whether or not they are trading, must keep accounting records. These generally include the following:

Quoted Companies

A quoted company is a company incorporated in Great Britain whose equity share capital is included in the Official List, is officially listed in an EEA State, or is admitted to either the New York Stock Exchange or Nasdaq. Companies trading on the AIM or OFEX and companies with listed debt securities only, do not have to prepare an operating and financial review.

Smaller Companies

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 . Very small companies and dormant companies may also be exempt from audit.

For financial years beginning on or after 1 January 2005, the accounts may be prepared in accordance with international accounting standards.

Delivery 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'

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 deadline for delivery to the Registrar is calculated to the exact day. For example, a private company incorporated on 1 January 2005 with an Accounting Reference Date (ARD) of 31 January has until midnight on 1 November 2006 (22 months from the date of incorporation) to deliver its accounts, not 30 November.

If the first accounts cover a period of 12 months or less, the normal times allowed for delivering accounts apply . These are as follows:-

However, if the accounting reference period has been shortened, the time allowed for filing the accounts is the longer of:

It is important to 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. Similarly, a private company with an ARD of 28 February has until 28 December, not 31 December.

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.

An application may 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 and 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.

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:

Length of delay - private company

Failing to deliver accounts on time is also a criminal offence for which company directors may be prosecuted. 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.

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 and dated by them.

You do not have to lay the accounts before a general meeting of the company, or have them agreed by HMRC, before sending them 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.

Section 706 of the Companies 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 they treat the original as not having been delivered).

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.

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