This booklet is a guide to the rules governing public disclosure of accounts by all limited companies.

The booklet covers three main topics:

1. Accounting reference dates (ARD). The ARD is the financial year-end. It is also the date that determines when accounts are due for delivery to Companies House. Every company has an ARD. Companies House must be told in advance when the date is about to be changed. It can be costly if you forget to tell us and prepare accounts to the wrong date. If you do, we will refuse registration of the accounts and you will have to prepare fresh accounts to the ARD held on record at Companies House.

2. Preparing and filing accounts. There are deadlines by which accounts must be prepared and delivered to Companies House. If you miss the deadline an automatic penalty will be levied, without exception. So it is important that you, your accountants and your auditors are aware of the filing deadline.

3. Content of accounts. This booklet cannot tell you how to prepare company accounts - your accountant has specialist knowledge of this. But it will tell you what documents make up a set of accounts, what exemptions you may be able to take advantage of, and whether you will need to appoint an auditor.

You will find the relevant law in the Companies Act 1985 (as amended in 1989 and later).

1. What is a financial year?

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 questions 2 and 3 - or a date up to seven days either side of the ARD, if this is more convenient.

2. How is the ARD fixed?

For a new company, the ARD is set using its date of incorporation - see question 3. You can change the first accounting reference period and subsequent accounting reference periods by changing the ARD - see questions 4 and 5.

3. What period must a company's first accounts cover?

For all new companies, 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. Although the ARD is set on incorporation, you can change it - see question 4.

4. Can the ARD be changed?

Yes, by completing Form 225 and sending it to Companies House. But the change can only be made to the current or the immediately previous accounting reference period and you have to register the new ARD before the filing deadline of the accounts. In other words, if Companies House is expecting accounts for a particular accounting reference period and they become overdue, it is too late to say that you wanted to change the ARD. Private companies normally have 10 months and public companies 7 months to send their accounts to Companies House. The period allowed for sending a company's first accounts is calculated differently and this is explained in chapter 2.

5. Are there any restrictions on changing the ARD?

You may change an ARD by shortening an accounting reference period as often as you like and by as many months as you like. However, there are restrictions on extending accounting reference periods:

• You may not extend a period so that it lasts more than 18 months from the start date of the accounting period.
  
  
• You may not extend more than once in 5 years unless:
  
  (a) the company is subject to an administration order; or
  
  (b) the Secretary of State has directed this; or
  
  (c) the company is aligning its accounting reference date with that of a subsidiary or parent undertaking established within the European Economic Area. Countries comprising the European Economic Area are as follows:
  
  Iceland, Norway, Finland, Sweden, Ireland, United Kingdom, Denmark, Germany, Netherlands, Belgium, Luxembourg, Austria, Portugal, Spain, France, Italy, Greece, Liechtenstein.

A company incorporated overseas which has registered:

• a branch in Great Britain, and which does not have to publish audited accounts in its country of incorporation; or
  
  
• a place of business in Great Britain;

A company incorporated overseas which has registered a branch in Great Britain, and which has to publish accounts in its country of incorporation is subject to different rules - see our booklet, 'Oversea Companies'.

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CHAPTER 2
Preparing and filing accounts

This chapter explains the basic rules on filing accounts. It applies to all company accounts irrespective of whether any filing exemptions apply to the content of the accounts.

1. Do all companies have to keep accounting records?

Yes. All limited and unlimited companies, whether or not they are trading, must keep accounting records.

2. What does a set of accounts include?

Generally, accounts must include:

• a profit and loss account (or income and expenditure account if the company is not trading for profit);
  
  
• a balance sheet signed by a director;
  
  
• an auditors' report signed by the auditor (if appropriate);
  
  
• a directors' report signed by a director or the secretary of the company;
  
  
• notes to the accounts; and
  
  
• group accounts (if appropriate).

3. Do all companies have to deliver their accounts 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' - see chapter 3, 4 and 5.

Unlimited companies need only deliver accounts to the Registrar if, during the period covered by the accounts, the company was:

• a subsidiary or a parent of a limited undertaking; or
  
  
• a banking or insurance company (or the parent company of a banking or insurance company); or
  
  
• a 'qualifying company' within the meaning of the Partnerships and Unlimited Companies (Accounts) Regulations 1993 - see chapter 7 of this booklet; or
  
  
• operating a trading stamp scheme.

A company's first accounts cover the period starting on the date of incorporation, not the first day of trading. They end on the accounting reference date (ARD) or up to 7 days either side of that date. ARDs and how to change them are covered in chapter 1.

Subsequent accounts start on the day after the previous accounts ended. They finish on the ARD or up to 7 days either side of it.

5. How long do I have to file my company's first 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 definition of a period of months in connection with filing the accounts also applies to the first accounts. For example, a private company incorporated on 1 January with an Accounting Reference Date (ARD) of 31 January has until midnight on 1 November (22 months from the date of incorporation) to deliver its accounts, not 30 November.

6. How long do I normally have to file my accounts?

Unless you are filing you company's first accounts (see question 5) the time normally allowed for delivering accounts to Companies House is:

• for a private company, 10 months from the ARD;
  
  
• for a public company, 7 months from the ARD.
  
  

• for a private company 10 months (or for a public company 7 months) from the ARD; or
  
  
• 3 months from the date of the notice (Form 225).

7. Can the time allowed for delivering accounts be extended?

If a company carries on business or has interests overseas, a 3-month extension to the normal filing period can be claimed by delivering Form 244 to Companies House. This form must be delivered before the normal filing deadline and this must be done for every year that the company wishes to claim the extension. It does not automatically apply from one year to the next.

An application may also 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, 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.

For companies incorporated in England & Wales write to:	For companies incorporated in Scotland write to:
The Secretary of State for Trade & Industry c/o Companies Admin Section Companies House Crown Way Cardiff CF14 3UZ DX33050 Cardiff	The Secretary of State for Trade & Industry Companies House 37 Castle Terrace Edinburgh EH1 2EB DX ED235 Edinburgh 1

8. What 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	Private company
3 months or less	£ 500	£100
3 months one day to 6 months	£1000	£250
6 months one day to 12 months	£2000	£500
More than 12 months	£5000	£1000

Failing to deliver accounts on time is also a criminal offence for which company directors may be prosecuted. Late filing penalties are fully explained in our booklet, 'Late Filing Penalties'.

Please note: 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.

9. Who can approve and sign accounts?

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 by them.

10. Does Companies House give technical advice on accounts?

No. We can give general guidance, but not advice on specific accounting issues. Firstly, giving technical advice is not a role that the Government has given us. Secondly, it is not practicable: your accounts are subject to complex legal requirements, and we do not know enough about your company to be confident that we are giving you proper advice.

Consult an accountant if you need this sort of advice.

11. What happens to documents sent 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.

The remainder of this chapter lays down a few quality guidelines to follow when preparing accounts and other documents for filing at Companies House.

12. What happens if my documents do not meet the guidelines?

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

13. How should documents be set out?

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.

When you prepare a document:

• use black ink or black type;
  
  
• use bold lettering (some elegant thin typefaces and pens give poor quality copies);
  
  
• don't send a carbon copy;
  
  
• don't use a dot matrix printer;
  
  
• remember - photocopies can result in a grey shade that will not scan well;
  
  
• use A4 size paper with a good margin; and
  
  
• include the company number in the top right-hand corner of the first page.

If you are producing colour-printed glossy accounts, please save them for your shareholders and others who will appreciate them. We still need black on white with a matt finish. A typed, unbound version of a printer's proof is ideal, provided it has the necessary signatures.

14. Can I find out more about this?

For further guidance on print requirements contact 029 2038 0575.

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CHAPTER 3
Small and medium-sized company exemptions

1. What exemptions are available?

Certain small or medium-sized companies may prepare accounts for their members under the special provisions of sections 246 and 246A of the Companies Act 1985. In addition, they may prepare and deliver abbreviated accounts to the Registrar.

This chapter explains the exemptions available to small and medium-sized companies. Certain small companies with a turnover of less than £1 million (£250,000 for companies that are charities) and assets of less than £1.4 million can claim exemption from audit. This is dealt with in chapter 4.

The period accounts have to cover and the time allowed for sending them to Companies House is covered in chapter 2.

2. What is a small or medium-sized company?

Public companies and certain companies in the regulated sectors cannot qualify as small or medium-sized companies. For other companies, the size of the company (and in the case of a parent company the size of the group headed by it) in terms of its turnover, balance sheet total (meaning the total of the fixed and current assets) and average number of employees determines whether it is classed as small or medium-sized.

The exact conditions for qualifying as a small or medium-sized company are given below.

To be a small company, at least two of the following conditions must be met:

• annual turnover must be £2,800,000 or less;
  
  
• the balance sheet total must be £1,400,000 or less;
  
  
• the average number of employees must be 50 or fewer.

• annual turnover must be £11,200,000 or less;
  
  
• the balance sheet total must be £5,600,000 or less;
  
  
• the average number of employees must be 250 or fewer.

If the company is a parent company, it cannot qualify as a small or medium-sized company unless the group headed by it is also small or medium-sized. The exact conditions for qualifying as a small or medium-sized group are given at question 4.

Generally, a company qualifies as 'small' or 'medium-sized' in its first financial year, or in any subsequent financial year if it fulfils the conditions in that year and the year before. If the company ceases to be small or medium-sized, the exemption continues for the first year that the company does not fulfil the conditions. And the exemption continues uninterrupted if the company reverts to being small or medium-sized the following year - see the table below.

If you think the company might qualify as small or medium-sized, you should consult a professional accountant before you prepare 'special-provision' accounts. If you abbreviate the accounts, you will also need a special auditor's report for filing with the Registrar, confirming that the company qualifies to produce such accounts. This report is not needed if the company is exempt from audit - see chapter 4 on very small companies.

The following table may help you decide whether you qualify to prepare 'small' or 'medium' accounts.

The table applies to small companies. For medium-sized companies simply substitute 'medium-sized' for 'small'.

Year 1	Year 2	Year 3	Qualified in:
			1st financial year
small			Yes
not small			No
			2nd financial year
small	small		Yes
small	not small		Yes
not small	small		No
			3rd financial year
small	small	not small	Yes
small	not small	small	Yes
not small	small	small	Yes
small	not small	not small	No
not small	small	not small	No
not small	not small	not small	No

3. What does a small or medium-sized company have to deliver to the Registrar?

The company can deliver the accounts which were prepared for its members under the special provisions of part VII of the Companies Act 1985, or it can deliver an abbreviated version of these accounts.

Abbreviated accounts of a small company must include:

• The abbreviated balance sheet and notes; and
• a special auditor's report (unless the company is also claiming audit exemption - see chapters 4 and 5).

• the abbreviated profit and loss account;
• the full balance sheet;
• a special auditor's report;
• the directors' report; and
• notes to the accounts.

The balance sheet (and if appropriate, the directors' report) must contain a statement that the accounts are prepared in accordance with the special provisions in Part VII of the Companies Act 1985 relating to small or medium-sized companies, as the case may be.

4. Are there special rules for small and medium-sized groups?

Yes, a parent company need not prepare group accounts or send them to the Registrar if the group is small or medium-sized and none of its member companies is a public company, a person who has permission under Part 4 of the Financial Services and Markets Act 2000 to carry on a regulated activity, or a person who carries on insurance market activity.

To qualify as small, a group of companies must meet at least two of the following conditions:

• aggregate turnover must be £2,800,000 net (£3,360,000 gross) or less;
  
  
• the aggregate balance sheet total must be £1,400,000 net (£1,680,000 gross) or less;
  
  
• the aggregate average number of employees must be 50 or fewer.

• its aggregate turnover must be £11,200,000 net (£13,440,000 gross) or less;
  
  
• the aggregate balance sheet total must be £5,600,000 net (£6,720,000 gross) or less;
  
  
• the aggregate average number of employees must be 250 or fewer.

A small parent company which has prepared individual accounts for its members using the special provisions of section 246(2) or (3) of the Companies Act 1985, may choose to prepare group accounts under the special provisions of section 248A. However, a small group cannot file abbreviated accounts at Companies House. Group accounts prepared under section 248A must contain a statement above the signature on the balance sheet, confirming that they are prepared in accordance with the special provisions of Part VII of the Companies Act 1985 relating to small companies.

If a medium-sized company decides to prepare group accounts, they must be full group accounts.

Format of accounts The format of the accounts must follow the relevant Schedules to the Companies Act 1985. The provisions relating to small and medium-sized companies are in Schedules 4, 5, 6, 8 and 8A.

6. How long do I have to deliver accounts to Companies House?

The same time applies as for all other accounts. The same penalties are imposed for late filing. See chapter 2.

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CHAPTER 4
Very small company audit exemptions

1. What exemption is available?

There is total exemption from audit for certain small companies (including very small charitable companies) if they are eligible and wish to take advantage it. Some charitable companies are exempt from audit but must provide an accountant's report on the accounts (partial exemption). Further details about how to claim exemption are in this chapter.

2. Which small companies qualify for audit exemption?

To qualify for total audit exemption, a company must

• qualify as small (see chapter 3)
• have a turnover of not more than £1 million; and
• have a balance sheet total of not more than £1.4 million.

For a charitable company to qualify for total audit exemption it must qualify as small (see chapter 3), its gross income must not be more than £90,000 and its balance sheet total must not more than £1.4 million.

Charitable companies which qualify as small (see chapter 3) and have a gross income between £90,000 and £250,000 and a balance sheet total of no more than £1.4 million qualify for partial exemption.

3. Are all types of small companies eligible for the exemption?

No. Audited accounts must be delivered to Companies House if the company falls into any of the following categories:

(a) A parent company or subsidiary undertaking (unless dormant for the period during which it was a subsidiary) except where the group:

• qualifies as a small group or would qualify if all the bodies corporate in the group were companies; and
• the turnover for the whole group is not more than £1 million net or £1.2 million gross (for a financial year which ended before 26 July 2000 or if the company is a charity, the combined turnover must be no more than £350,000 net or £420,000 gross); and
• the group's combined balance sheet total is not more than £1.4 million net (£1.68 million gross).

• a public company or body corporate which (not being a company) has power under its constitution to offer shares or debentures to the public;
• a person who has permission under Part 4 of the Financial Services and Markets Act 2000 to carry on a regulated activity;
• a person who carries on insurance market activity.

(c) A person who has permission under Part 4 of the Financial Services and Markets Act 2000 to carry on a regulated activity.

(d) A person who carries on insurance market activity.

(e) An appointed representative within the meaning of s.39 of the Financial Services and Markets Act 2000.

(f) A public limited company unless the company is dormant - see chapter 5.

(g) A special register body or employers association under the Trade Union and Labour Relations (Consolidation) Act 1992.

(h) A company where an audit is required by a member or members holding at least 10% of the nominal value of issued share capital or holding 10% of any class of shares; or - in the case of a company limited by guarantee - 10% of its members in number. The demand for the accounts to be audited should be in the form of written notice to the company, deposited at the registered office at least one month before the end of the financial year in question.

Some flat management companies may have to prepare audited accounts to comply with the terms of their lease. If in doubt, you should seek professional advice.

4. What does an audit-exempt company need to send to Companies House?

If the company qualifies (see question 2 and 3), unaudited accounts may be delivered to the Registrar in the form of an abbreviated balance sheet and notes. The balance sheet must contain the following statements above the director's signature:

(a) For the year ended . . . (date) the company was entitled to exemption under section 249A(1) of the Companies Act 1985. (In the case of charitable companies which are claiming partial exemption, the reference will be to section 249A(2)).

(b) Members have not required the company to obtain an audit in accordance with section 249B(2) of the Companies Act 1985.

(c) The directors acknowledge their responsibility for:

i. ensuring the company keeps accounting records which comply with section 221; and

ii. preparing accounts which give a true and fair view of the state of affairs of the company as at the end of the financial year, and of its profit or loss for the financial year, in accordance with the requirements of section 226, and which otherwise comply with the requirements of the Companies Act relating to accounts, so far as applicable to the company;

(d) The accounts have been prepared in accordance with the special provisions in Part VII of the Companies Act 1985 relating to small companies.

If the company chooses, it may deliver the un-abbreviated accounts prepared for its members. The same statements must appear on the un-abbreviated balance sheet.

5. My company is a charity claiming partial exemption, what must the accountant's report say?

The accountant's report must state that:

(a) the accounts of the company for the financial year in question are in agreement with the accounting records kept by the company under section 221 of the Companies Act 1985; and

(b) having regard only to, and on the basis of, the information in those accounting records, those accounts have been drawn up in a manner consistent with the provisions of the Act as specified in subsection (6) of section 249C, so far as applicable to the company.

(c) having regard only to, and on the basis of, the information in the accounting records, the company satisfied the requirements of section 249A(4), for the financial year in question, and did not fall within section 249B(1)(a) to (f) at any time within that financial year.

The report must show the name and signature of the reporting accountant.

6. Who can be a reporting accountant?

A reporting accountant is either:

• any member of a body listed below who, under the rules of that body, is entitled to engage in public practice, and who is eligible for appointment as a reporting accountant; or
  
  
• any person, (whether or not a member of any such body), who is eligible for appointment as a company auditor under the rules of that body.

(a) the Institute of Chartered Accountants in England and Wales;
(b) Institute of Chartered Accountants of Scotland;
(c) Institute of Chartered Accountants in Ireland;
(d) Association of Chartered Certified Accountants;
(e) Association of Authorised Public Accountants;
(f) Association of Accounting Technicians;
(g) Association of International Accountants;
(h) Chartered Institute of Management Accountants.

An individual, body corporate or firm may be appointed as a reporting accountant. A partnership that is not a legal person may be appointed under section 26 of the Companies Act 1989.

The reporting accountant must be independent and meet the conditions set out in section 27 of the Companies Act 1989. This means, for example, that he or she cannot be an officer or employee of the company.

7. How long do I have to deliver accounts to Companies House?

The same time applies as for all other accounts. The same penalties are imposed for late filing. See chapter 2.

8. Does an audit exempt company still have to send accounts to its members?

Yes. In accordance with the Companies Act 1985, members have a right to receive or demand copies of accounts and the related reports.

Possible drawbacks of unaudited accounts Banks and credit managers rely on information available from Companies House to assess a company's creditworthiness and currently look for the reassurance of an independent audit. If it qualifies for audit exemption, a company will need to decide whether unaudited accounts are appropriate to its own circumstances.

9. Are annual accounts required if a company is not trading?

All limited companies, whether they trade or not, must deliver accounts to Companies House. However, a limited company may claim exemption from audit as a 'dormant company' if it has not traded during a financial year, and provided it meets certain other criteria (see chapter 5).

Dormant companies do not need to appoint auditors and can deliver even simpler annual accounts to Companies House. For more information about dormant company accounts, see chapter 5.

10. My company's articles of association state that the company must have an auditor but otherwise we would be exempt. What can we do?

Companies may decide to revise their articles of association to ensure that these do not stop them taking advantage of the audit exemptions. Companies with articles based on the model articles at Table A of the Companies Act 1985 are unlikely to have such problems. However, the 1948 version of Table A (and other similar earlier provisions) imposes an obligation to appoint auditors. Companies with such articles may wish to take legal advice about possible changes.

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CHAPTER 5
Audit exemption for dormant companies

1. What exemption is available?

Dormant companies can claim exemption from audit and need only prepare and deliver to Companies House an abbreviated balance sheet and notes. A profit-and-loss account and directors' report do not have to be included in dormant company accounts filed at Companies House but a directors' report must be provided to members.

2. What is a dormant company?

A company is dormant if it has had no 'significant accounting transactions' during the period.

For accounting periods ending on or after 26 July 2000,when considering if a company is dormant you can disregard the following financial transactions:

• payment for shares taken by subscribers to the memorandum of association;
• fees paid to the Registrar of Companies for a change of company name, the re-registration of a company and filing annual returns; and
• payment made in respect of civil penalties imposed by the Registrar of Companies for delivering accounts to the Registrar after the statutory time allowed for filing.

A company may not take advantage of the dormant company audit exemption if it is:

• a person who has permission under Part 4 of the Financial Services and Markets Act 2000 to carry on a regulated activity;
  
  
• a person who carries on insurance market activity.

(Insert relevant statement(s) - see previous page)

Approved by the board of directors on...............(date)

and

signed on their behalf by......................(DIRECTOR)

DORMANT COMPANY BALANCE SHEET FORMAT B

COMPANY NO: ................................

COMPANY NAME: .............................................

BALANCE SHEET AS AT ../../....