Private limited companies are required by law to provide certain items of financial information each year to Companies House and HMRC. This information includes a company’s full (‘statutory’) annual accounts and a Company Tax Return, which must be submitted after their financial year-end. The exact rules on what and when these financial records must be given to HMRC and Companies House vary; hence it is important to check the guidelines as they apply to your business. In this article, we will explain the difference between the annual accounts required for Companies House and HMRC and how these differ depending on factors such as the size and trading status of your business.
What is included in a company’s statutory accounts?
A company’s “statutory accounts”, also referred to as “annual accounts”, must be prepared each year based on financial information from the last full tax year and include:
- a balance sheet: outlines a company’s assets, liabilities, and shareholder’s equity as of the financial year-end
- a profit and loss account: provides details on the company’s sales, operational costs and the amount of profit or loss made during the most recent financial year
- notes about the accounts
- a director’s report: describes the current state of the company and how it is complying with financial/accounting and corporate social responsibility standards
- Auditors report: depending on the size of the company
Once finalised, a company’s statutory accounts must be sent by the required deadlines to:
- HM Revenue and Customs (HMRC) (this information is submitted to HMRC as part of a company’s “Company Tax Return”)
- Companies House
- Those with shares in the company
- People who have the right to attend the company’s general meetings
As we will discuss later in this article, your company may be able to send its statutory accounts to HMRC and Companies House at the same time, or there may be different deadlines which apply.
How do the Companies House and HMRC statutory accounts requirements differ?
If you are responsible for submitting annual accounts to HMRC and Companies House, it is important to understand how the requirements may differ between each. There are three main questions you need to ask:
1) Is the company actively trading?
If your company has been actively trading during the financial year, you will need to submit the statutory accounts to both HMRC and Companies House.
If your company is dormant, the rules state that you will only need to submit your statutory accounts to Companies House. You will not need to send accounts to HMRC because dormant entities are not legally mandated to submit and prepare Company Tax Returns.
2) What do I need to submit to HMRC?
If your company is active, you will need to submit a full set of statutory accounts to HMRC as part of your Company Tax Return regardless of the size of the company (i.e. balance sheet, profit and loss accounts, and notes about the accounts). You will also need to submit a director’s report assuming your company is not a micro-entity (see below for what is meant by a “micro-entity”).
3) What do I need to submit to Companies House?
The information you will need to provide within your Companies House submission will depend on the size of your company. Companies that are registered as small, a micro entity, or dormant are typically only required to submit “abridged” accounts which contain less information than full accounts. Medium-sized and large companies must provide more detailed accounts, as explained below.
Micro-entity companies
A company is classed as a micro-entity if two or more of the following criteria apply: a turnover of £632,000 or less, £316,000 or less on its balance sheet, and 10 employees or less.
Micro-entities must submit to Companies House:
- a balance sheet stating, “The accounts have been prepared in accordance with the micro-entity provisions.”
- a profit and loss account
- an auditors’ report (some micro-entities are exempt from this requirement)
- notes to the accounts
Small companies
A company is subject to the “small companies’ regime” under Parts 15 and 16 of the Companies Act 2006, allowing for the preparation of less detailed accounts than required for large and medium-sized companies.
A company is classed as “small” if it meets two or more of the following criteria: annual turnover of no more than £10.2 million or less, balance sheet value of £5.1 million or less, and no more than 50 employees on average.
Small companies must submit to Companies House:
- a balance sheet stating, “The accounts have been prepared in accordance with the special provisions applicable to companies subject to the small companies’ regime.”
- a profit and loss account
- an auditors’ report
- notes to the accounts
- group accounts (if there is a small parent company and they choose to prepare them)
- a directors’ report: this must contain the signature of a secretary or director and their printed name
Medium-sized companies
A company is classed as “medium-sized” if it meets two or more of the following criteria: annual turnover of no more than £36 million or less, balance sheet value of £18 million or less, and no more than 250 employees on average.
Medium-sized companies must submit to Companies House:
- a balance sheet (with the printed name and signature of a director)
- a profit and loss account
- an auditors’ report
- notes to the accounts
- group accounts, if applicable, based on the company’s structure
- a directors’ report – this must include a business review or strategic report containing the printed name of the approving secretary or director
Dormant companies
The Companies House rules make it clear that all limited companies must submit accounts, including those registered as dormant. Unaudited accounts for dormant companies are much simpler than those for actively trading entities. A company is classed as “dormant” if it can show that it has had no “significant accounting transactions” (i.e. transactions that should have been entered into the accounting records) in the relevant accounting year. If your company is formally dormant, it may be able to claim an exemption from audit under section 480 of the Companies Act 2006.
Dormant companies are not required to submit a profit and loss account or directors’ report to Companies House. They must, however, submit:
- a balance sheet stating “the company was dormant throughout the accounting period” above the director’s signature and their printed name
- previous year’s accounting figures for comparison (this is required even if there has been no income or expenditure in the current year)
- notes to the balance sheet
What are the filing deadlines for Companies House and HMRC?
It is important to check when you need to submit your company’s accounts each year to Companies House and HMRC. Missing the deadline for either can result in a sizeable fine. By clarifying the deadlines you will need to work to, you can prepare accordingly, ensuring that the accounts are drafted and finalised in good time. For Companies House, accounts must be formally submitted no more than 9 months after your company’s financial year ends. If you are providing your company’s first set of accounts to Companies House, the deadline is 21 months after the date the company was registered with them.
When it comes to HMRC, the deadline for the submission of your company’s statutory accounts is 12 months after your accounting period for corporation tax ends. In most cases, the accounting period for your company’s corporation tax is the same as the financial year used for your annual accounts.
The penalties for late submission of your statutory accounts to Companies House and HMRC differ. For Companies House, the penalties are as follows:
- – Up to 1 month late: £150
- – 1 to 3 months late: £375
- – 3 to 6 months late: £750
- – More than 6 months late: £1,500
For HMRC, the penalties for late submission are as follows:
- – 1 day late: £100
- – 3 months late: An additional £100
- – 6 months late: HMRC will estimate the amount of corporation tax owned and add 10% to the amount unpaid
- – 12 months late: An additional 10% of any unpaid tax
Final words
The above guidance only provides a brief outline of a company’s statutory filing obligations with HMRC and Companies House. As we have outlined, the rules vary based on the trading status, size, and deadlines provided by HMRC and Companies House. Different rules apply to other business entities, such as partnerships and community interest companies (CICs). If you are unclear about which submission regime you need to follow, it is advisable to check as soon as possible with a specialist in company filing obligations. This is especially important if your company has grown or downsized in the most recent financial year, as your statutory filing requirements may have changed.
Uniwide Formations is one of the UK’s foremost professional business service providers based in Kensington, London, specialising in limited company registration matters. If you have any questions about the reporting and filing obligations of your limited company, feel free to speak to our team.
