Annual accounts are a set of financial and business reports that summarise the activities and performance of a company over a 12-month period. These accounts must be prepared every year for Companies House, HMRC, company members, and anyone who has the right to attend the company’s general meetings.
You will need to file annual accounts with both Companies House and HMRC each year. Statutory accounts should be prepared for HMRC and included with your Company Tax Return (CT600). You may be able to send abridged (simpler) annual accounts to Companies House if your company if dormant or qualifies as a ‘micro-entity’ or small company.
When your company’s annual accounts have been approved by the director(s), you must file them online. Accounts for Companies House should be filed through Companies House Service, and accounts for HMRC should be delivered with the Company Tax Return (CT600) through Government Gateway.
Companies that do not require an auditor (micro-entities and small companies) can file their accounts with Companies House using the same online service as their accounts and tax return for HMRC.
In certain circumstances, you may be permitted to deliver your annual accounts by post. LLPs, however, must always file their accounts for Companies House by post – they cannot use the online service.
You will have different deadlines for filing annual accounts with Companies House and HMRC. Accounts for Companies House are due 21 months after the date of company formation (first set of accounts), then 9 months after the end of the company’s financial year (subsequent annual accounts). Your Company Tax Return and accounts for HMRC are due 12 months after the end of your accounting period for Corporation Tax.
There is no legal requirement for companies to use an accountant to prepare annual accounts, unless the company is big enough to require an audit. However, many business owners choose to use an accountant for convenience and/or because they want to ensure that their accounts are prepared correctly, in accordance with International Financial Reporting Standards or GAAP (generally accepted accounting principles).
Full statutory accounts are the most comprehensive set of annual accounts that a company produces. They typically include a balance sheet, a profit and loss statement, supplementary notes about the accounts, a director’s report, and an auditor’s report (unless exempt).
Full statutory accounts must be included as part of the Company Tax Return and provided to all shareholders. Depending on the size of the company, statutory accounts may also need to be delivered to Companies House.
Abridged annual accounts are a simplified, abbreviated version of annual accounts that small companies, small LLPs, micro-entities, and dormant companies/LLPs are permitted to prepare for Companies House. They contain less information than full statutory accounts, which medium and large companies/LLPs must prepare for Companies House, and which all companies/LLPs must prepare for HMRC.
LLPs must deliver annual accounts to Companies House, even if they are dormant. Generally, LLP accounts should include a profit and loss account, a balance sheet, supplementary notes to the accounts, and an auditor’s report (unless exempt). A copy of the accounts must also be sent to every LLP member.
Dormant companies do not prepare accounts for HMRC because, ordinarily, they do not have to send Company Tax Returns. However, all dormant companies must still prepare dormant accounts for Companies House each year.
Your limited company will have its own financial year, which is the period of time reported in your annual accounts. In the first year, it will start on the date that your company was incorporated and will end the following year on the ‘accounting reference date’ (ARD), which is the last day of the month in which the company was set up.
With the exception of your first year, every financial year will be 12 months long, unless you choose to change the accounting reference date. Normally, your financial year will be the same as your ‘accounting period’ for Corporation Tax.
You can change your company’s financial year by applying to Companies House to change your accounting reference date (also known as your company’s year end). This will happen if you decide to shorten or lengthen your company’s financial year, i.e., making it run for less than 12 months or more than 12 months (up to a max. of 18 months).
Your company’s accounting reference date (ARD) is the date that marks the end of your company’s financial year. It is sometimes referred to as a company’s ‘year end’, and it is the date that your annual accounts should be made up to. Unless you decide to change your ARD, it will fall on the same date every year, which is the last day of the month in which the company was registered at Companies House.
You can apply online to Companies House to change your company’s accounting reference date (ARD), or ‘year end’, using form AA01. This will result in your financial year running for more or less than 12 months. Your ARD can be extended up to a period of 18 months, once every five years, or it can be shortened by any length of time, as often as needed. You can only change the ARD for the current or last financial year, and only if the accounts are not already overdue.
After incorporation, Companies House will send you an email or letter containing your accounting reference date (ARD). You can also find your ARD by looking up your company details on Companies House Service. Alternatively, if you register through Cheap Formations or create a free account on our website, you can view your ARD and other company details using our Online Client Portal.
Failure to file annual accounts on time is a criminal offence. If you file your company’s annual accounts late, Companies House will impose large financial penalties, which could also affect your credit score. Additionally, your company could be struck off the register, and directors could be personally fined in the criminal courts.
The annual accounts that you file at Companies House are published on the central companies register, which means they can be viewed online by the general public. This disclosure requirement is one of the obligations of being granted the privilege of limited liability for company debts.