Must a company keep accounts?
The following is a summary of the principal provisions
relating to company accounts. Further detail is presently
beyond the scope of this database. The law changed with
the implimentation of Part 15 of the Companies Act 2006
on 6th. April 2008.
Keeping accounting records
CA 2006, sec387 requires all companies to keep accounting
records which are sufficient to show and explain the
company's financial transactions and are such as to
disclose with reasonable accuracy, at any time, the
financial position of the company at that time and are
sufficient to enable the directors to ensure that the
annual accounts meet the statutory requirements.
Records must be kept for 3 years if a private company
and 6 years if PLC: CA 2006, sec388(4).
Accounting Reference Date (ARD) and financial years
When a new company is set up its Accounting Reference
Date is the last day of the month in which it is registered:
CA 2006, sec391(2).
The Accounting Reference Date identifies the end of
the accounting reference period (ARP) or financial year,
and the last dates for delivering accounts to members
and Companies House. A company can change its accounting
reference date: CA 2006, sec392 (notify Companies House
on form 225). The form can be downloaded from the forms
section of the library. When a change is made the
accounting period cannot last less than 6 months nor
more than 18. The financial year ends with the Accounting
Reference Date (plus or minus 7 days).
The last dates for filing accounts at Companies House
and providing them to members is 9 months after the
Accounting Reference Date if a private company and 6
months after if a PLC. (In the case of a new company
it is 21 or 18 months after the date of incorporation,
not the Accounting Reference Date.)
An extension of 3 months can be claimed if the company has business or interests overseas.
e.g. Private company incorporated on 18.11.08. If no
form 225 registered then Accounting Reference Date is
30.11. First accounting period is 18.11.08 to 30.11.09.
Accounts must be filed by 18.8.2010 (21 months after
date of incorporation). The next accounting period runs
from 1.12.2009 to 30.11.2010. Accounts to be filed by
30.8.2011.
The accounts which must be filed are a balance sheet,
profit and loss account, directors' report and auditors
report: CA 2006, sec396.
Group accounts (or consolidated accounts) must be filed
by a parent company in respect of itself and its subsidiary
undertakings (CA 2006, sec404). Group accounts must
comply with Sched. 4A. It is the ultimate holding company
which must do this (CA 2006, sec405).
Annual accounts and group accounts must be approved
by the board and signed by a director on behalf of the
board: CA 2006, sec414. Civil penalties are imposed
(strictly) for accounts filed late.
Up to 1month late: £150 (private); £750
(PLC)
Up to 3months late: £375 (private); £1,500
(PLC)
Up to 6 months late: £750 (private); £3,000
(PLC)
More than 6 months late: £1,500 (private); £7,500
(PLC): SI 2008/497.
Small and medium sized companies have exemptions. A
small company need file only a modified balance sheet.
Medium sized companies file a full set of accounts but
with less detail than full accounts: CA 2006, sec444
- 445.
Audit exemption applies to dormant companies and those
that qualify as 'small', for which they must have a
turnover of not more than £5.6 million; and have
a balance sheet total of not more than £2.8 million.
.
Related topics
Companies
House website has more detail on this. Once on the site, go to the guidance
booklets section, select Accounts and Accounting Reference dates.
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