Under the Companies Act 2006 a company must submit accounts in each financial year. The accounting provisions relevant to individual companies vary depending upon a number of attributes including the size of the company, whether the company is a private or public and whether it is listed or unlisted.
The most important factor that determines the applicable accounting regime is usually the size of the company.
Small Companies Regime
If a company is small enough then it falls within the small companies regime which is generally less complex (and costly) than the standard regime. There are similar provisions for small group companies, in brackets. To qualify two or more of the following criteria must be met:
- Turnover less than £6.5m (Group: aggregate £6.5m net or £7.8m gross)
- Balance sheet total of less than £3.26m (Group: £3.26m net or £3.9m gross)
- Less than 50 employees (Group: 50 employees)
To qualify, the specified criteria must have been met in the first year of the company and in subsequent years it must be met in the relevant year and in the preceding financial year.
The small companies regime cannot apply to public companies and certain other companies such as banks or insurance companies or companies in ineligible groups.
Medium-sized Companies
To qualify for the medium-sized companies regime two or more of the following criteria must be met:
- Turnover less than £25.9m (Group: £25.9 net or £31.1m gross)
- Balance sheet total of less than £12.9m (Group: £12.9m net or £15.5m gross)
- Less than 250 employees (Group: 250 employees)
Again the criteria must be met in the first year and in subsequent years, it must be met in the relevant year and the preceding financial year. Also the medium-sized companies regime does not apply to public companies and certain other companies such as banks or insurance companies.
Quoted Companies
Companies quoted on the official list according the Financial Services and Markets Act 2000, listed in the EEA or in the USA on the New York Stock Exchange or Nasdaq do not qualify for the small or medium sized company accounts regimes.
In addition to the differentiation relating to size and type of company certain business types such as banks and investment companies attract specific accounting regimes.
Rollingsons always recommends that businesses seek professional advice regarding accountancy matters.
If you need assistance in relation to any company or commercial matters Rollingsons has experienced lawyers can help; for more information please contact James Crighton via e-mail jcrighton@rollingsons.co.uk or by telephone on 0207 611 4848.
