Small company filing options FAQs

Small companies must file at Companies House the same version of its accounts and reports as prepared for its members. This means that if a company chooses to abridge all or part of its accounts, it must then file the abridged accounts at Companies House (see questions 9 to 10 for further information on abridged accounts). Similarly, if a small company prepares full accounts, it must then file the full accounts at Companies House.

Irrespective of whether a small company prepares abridged or full accounts for its members, it will have the option not to file a copy of the profit and loss account and/or the directors’ report with Companies House. Accounts filed without the profit and loss account and/or directors’ report are sometimes referred to as ‘filleted’ accounts (see questions 2 to 8 for more information).

If a small company chooses not to file either the directors’ report or the profit and loss account then the balance sheet must contain a statement that the accounts have been delivered in accordance with the provisions applicable to the small companies regime.

Additionally, if a small company chooses not to file the profit and loss account, the balance sheet delivered to Companies House must disclose that fact.

If a profit and loss account is not filed, there is no need to file any notes that relate solely to it. Under the small companies regime, the only mandatory note that falls into this category relates to ‘the amount and size of any individual items of income or expense of exceptional size or incidence’. This note can therefore be excluded from the accounts filed at Companies House.

Any other notes that are included in the accounts in order to provide a true and fair view may also be omitted from the accounts filed at Companies House if they relate directly to a profit and loss account line item.

Notes specifically relating to the balance sheet and any other notes to the accounts must be included in the accounts filed at Companies House. In our view this includes the entire accounting policies note, including any policies that relate to items appearing in the profit and loss account.

As noted above, if a profit and loss account is not filed, there is no need to file any notes that relate specifically to it. There has, however, been some debate about whether the ‘employee numbers’ note is or isn’t a profit and loss account note and whether it can be omitted. Some of this confusion seems to have arisen as paragraph 1AC.33 of FRS 102 suggests that this information is a note ‘supporting the income statement’.

The consensus view appears to be that the ‘employee numbers’ note is not a note specifically related to the profit and loss account and therefore should be included for filing.

There is no guidance in the law on this point, although in our view it is reasonable to renumber the remaining notes for the benefit of users. Accounts preparation software may in any case renumber the notes automatically.

Section 1A of FRS 102 encourages small companies to produce a statement of other comprehensive income and/or a statement of income and retained earnings where they are needed to give a true and fair view. Some small companies may also choose to prepare a statement of comprehensive income or – where eligible – a statement of income and retained earnings. Some small companies may also choose to prepare a statement of cash flows.

Section 444 Companies Act 2006 remains silent as to whether companies electing to file ‘filleted’ accounts are required to file these additional primary statements. In our view, there is no need to file any of these statements as they are not specifically mentioned in the Act, which simply states that a small company must deliver a copy of the balance sheet and that it may deliver a copy of the profit and loss account and a copy of the directors' report.

While the accounts filed with Companies House in paper format must include a director’s signature on the balance sheet, there is no requirement in the law for the directors to formally approve the ‘filleted’ accounts. However, in our view it may be advisable for those preparing the ‘filleted’ accounts to ask the board of directors to confirm formally that they consider the accounts suitable for filing, not least to avoid any misunderstanding about what will end up on the public record.

A small company that is required or chooses to have an audit is required to file its audit report only when it has chosen to file a copy of the profit and loss account. A small company that does not file its profit and loss account is not required to file its audit report.

If a small company that is required or chooses to have an audit chooses not to file the profit and loss account, the notes to the balance sheet filed at Companies House must disclose:

• whether the auditor’s report was qualified or unqualified;
• if the report was qualified, the basis of the qualification;
• if the report was unqualified, reference should be made to any matters to which the auditor drew attention by way of emphasis; and
• the name of the auditor and the name of the person who signed the auditor’s report as senior statutory auditor or, in circumstances in which the names may be and have been omitted, a statement that a resolution has been passed and notified to the Secretary of State in accordance with s506 CA 2006.

This additional note would only be included in the set of accounts that is filed at Companies House. In our view it could be included as an additional numbered note or simply attached as an additional page in the copy of the accounts that is filed.

When a small company chooses to abridge all or part of its accounts, it must also deliver to Companies House a statement that all the members have consented to the abridgement. In practice this requirement can be met by including a note in the filed accounts to state that consent has been received. The accounting regulations do not specify whether the statement should be separate from or part of the abridged accounts. Companies House has confirmed to ICAEW that, while they check the entire accounts for the statement, they strongly recommend that it is included on the balance sheet to minimise the risk of it being missed.

As noted in question 1, a small company that choses to file abridged accounts can elect not to file a copy of the profit and loss account and/or the directors’ report with Companies House ie, they can choose to ‘fillet’ the abridged accounts.

To prepare abridged accounts the company must actively seek the consent of its members and have evidence of their agreement. The consent can be sought only after the year end and before the accounts have been approved and must be obtained for each and every year the company wishes to prepare an abridged balance sheet and/or profit and loss account.

Appendix 1 to these FAQs provides a summary of what in our view needs to be filed in a number of common scenarios.

Appendix 2 to these FAQs includes examples of the statements and notes that will typically be included in ‘filleted’ and abridged accounts.

More information on the small and micro-entities regimes can be found at icaew.com/smallcompanyreporting.

ICAEW members and ACA students can access a selection of UK GAAP model accounts and disclosure checklists by visiting www.icaew.com/frs102. It is always important to complete disclosure checklists as relying on software may not always ensure that all of the right disclosures are made.

ICAEW members can contact our Technical Advisory Service on +44 (0)1908 248 250 for confidential, expert advice.