Considering the types of financial accounts for private companies and filing penalties that might apply is important for any business. In this article we have laid out the basic types available to assist with this.
Financial Accounts
Financial accounts are a historical record of your business’ performance over a past period, generally a year. They may be used for the benefit of external shareholders, employees, suppliers, bankers and authorities. All companies must produce a set of full financial accounts for the company which will also be used by HMRC (HM Revenue and Customs) for Corporation Taxation purposes.
All Limited companies, whether they have traded or not, are OBLIGED BY LAW to prepare a set of financial accounts each year and to file a copy with Companies House to be kept on public record. If you don’t comply there may be serious consequences such as the company being struck off or prosecution of the company’s officers.
Private companies must file accounts with 21 months of the business’ formation, and within nine months of the end of each financial year thereafter.
There are three different types for trading companies which can be filed with Companies House, depending on the size of the company.
In general terms these are as follows:
Micro Entity
A micro entity company must meet at least two of the following criteria:
- Turnover is no more than £632,000
- Balance sheet total is no more than £316,000
- Average number of employees is no more than 10
Abridged or Filleted Accounts
A small company must meet at least two of the following criteria:
- Turnover is no more than £10.2 million
- Balance sheet total is no more that £5.1 million
- Average number of employees is no more than 50
Full accounts
A medium-sized company must meet at least two of the following criteria:
- Turnover is no more than £36 million
- Balance sheet total is no more than £18 million
- Average number of employees must not exceed 250
Large companies will be any that fall outside the above criteria.
Since the introduction of FRS 102 in 2016, in some cases companies are able to choose which elements of their company accounts are filed at Companies House and are therefore on public view.
Dormant companies, which are companies which have not traded nor have no significant accounting transactions during the period, must still file a set of dormant accounts.
Further details from Companies House can be found here.
Late filing penalty fees
The penalty only applies to companies. The level of the penalty depends on how late the accounts reach Companies House (see table). These are the levels currently in place:
| Length of period (measured from the date the accounts are due) | Private company penalty | Public company penalty |
|---|---|---|
| Not more than 1 month | £150 | £750 |
| More than 1 month but not more than 3 months | £375 | £1,500 |
| More than 3 months but not more than 6 months | £750 | £3,000 |
| More than 6 months | £1,500 | £7,500 |
A private company’s set of acceptable accounts for the accounting period ending 30 September 2018 would need to be delivered by 30 June 2019 to avoid a late filing penalty. If they were delivered to Companies House on 15 July 2019, a late filing penalty of £150 would be incurred.
If a company files late in two successive financial years the penalty is doubled. This means that if a private company delivered accounts for the period ending 30 September 2017 late and then delivered accounts for the subsequent period ending 30 September 2018 late, it would incur a £300 late filing penalty.
You can find more detail on this here.
The above details are obviously very brief. For more detailed guidance we can assist you with the size of your business and filing requirements to suit your needs.
If you wish to speak to a member of our team, please contact us.