The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008

Special rules

Subordinated assets

11.—(1) The amount of any assets that are subordinated must be shown either as a subdivision of any relevant asset item or in the notes to the accounts; in the latter case disclosure must be by reference to the relevant asset item or items in which the assets are included.

(2) In the case of assets items 2 to 5 in the balance sheet format, the amounts required to be shown by note (20) to the format as sub-items of those items must be further subdivided so as to show the amount of any claims included therein that are subordinated.

(3) For this purpose, assets are subordinated if there is a contractual obligation to the effect that, in the event of winding up or bankruptcy, they are to be repaid only after the claims of other creditors have been met, whether or not a ranking has been agreed between the subordinated creditors concerned.

Syndicated loans

12.—(1) Where a company is a party to a syndicated loan transaction the company must include only that part of the total loan which it itself has funded.

(2) Where a company is a party to a syndicated loan transaction and has agreed to reimburse (in whole or in part) any other party to the syndicate any funds advanced by that party or any interest thereon upon the occurrence of any event, including the default of the borrower, any additional liability by reason of such a guarantee must be included as a contingent liability in Memorandum item 1(2).

Sale and repurchase transactions

13.—(1) The following rules apply where a company is a party to a sale and repurchase transaction.

(2) Where the company is the transferor of the assets under the transaction—

(a) the assets transferred must, notwithstanding the transfer, be included in its balance sheet,

(b) the purchase price received by it must be included in its balance sheet as an amount owed to the transferee, and

(c) the value of the assets transferred must be disclosed in a note to its accounts.

(3) Where the company is the transferee of the assets under the transaction, it must not include the assets transferred in its balance sheet but the purchase price paid by it to the transferor must be so included as an amount owed by the transferor.

Sale and option to resell transactions

14.—(1) The following rules apply where a company is a party to a sale and option to resell transaction.

(2) Where the company is the transferor of the assets under the transaction, it must not include in its balance sheet the assets transferred but it must enter under Memorandum item 2 an amount equal to the price agreed in the event of repurchase.

(3) Where the company is the transferee of the assets under the transaction it must include those assets in its balance sheet.

Managed funds

15.—(1) For the purposes of this paragraph, “managed funds” are funds which the company administers in its own name but on behalf of others and to which it has legal title.

(2) The company must, in any case where claims and obligations arising in respect of managed funds fall to be treated as claims and obligations of the company, adopt the following accounting treatment.

(3) Claims and obligations representing managed funds are to be included in the company’s balance sheet, with the notes to the accounts disclosing the total amount included with respect to such assets and liabilities in the balance sheet and showing the amount included under each relevant balance sheet item in respect of such assets or (as the case may be) liabilities.

Profit and loss account formats
Format 1
Vertical layout
	1.	Interest receivable (1)
			(1)	Interest receivable and similar income arising from debt securities [and other fixed-income securities]
			(2)	Other interest receivable and similar income
	2.	Interest payable (2)
	3.	Dividend income
			(a)	Income from equity shares [and other variable-yield securities]
			(b)	Income from participating interests
			(c)	Income from shares in group undertakings
	4.	Fees and commissions receivable (3)
	5.	Fees and commissions payable (4)
	6.	Dealing [profits] [losses] (5)
	7.	Other operating income
	8.	Administrative expenses
			(a)	Staff costs
					(i)	Wages and salaries
					(ii)	Social security costs
					(iii)	Other pension costs
			(b)	Other administrative expenses
	9.	Depreciation and amortisation (6)
	10.	Other operating charges
	11.	Provisions
			(a)	Provisions for bad and doubtful debts (7)
			(b)	Provisions for contingent liabilities and commitments (8)
	12.	Adjustments to provisions
			(a)	Adjustments to provisions for bad and doubtful debts (9)
			(b)	Adjustments to provisions for contingent liabilities and commitments (10)
	13.	Amounts written off fixed asset investments (11)
	14.	Adjustments to amounts written off fixed asset investments (12)
	15.	[Profit] [loss] on ordinary activities before tax
	16.	Tax on [profit] [loss] on ordinary activities
	17.	[Profit] [loss] on ordinary activities after tax
	18.	Extraordinary income
	19.	Extraordinary charges
	20.	Extraordinary [profit] [loss]
	21.	Tax on extraordinary [profit] [loss]
	22.	Extraordinary [profit] [loss] after tax
	23.	Other taxes not shown under the preceding items
	24.	[Profit] [loss] for the financial year

Profit and loss account formats
Format 2
Horizontal layout
A.	Charges
		1.	Interest payable (2)
		2.	Fees and commissions payable (4)
		3.	Dealing losses (5)
		4.	Administrative expenses
				(a)	Staff costs
						(i)	Wages and salaries
						(ii)	Social security costs
						(iii)	Other pension costs
				(b)	Other administrative expenses
		5.	Depreciation and amortisation (6)
		6.	Other operating charges
		7.	Provisions
				(a)	Provisions for bad and doubtful debts (7)
				(b)	Provisions for contingent liabilities and commitments (8)
		8.	Amounts written off fixed asset investments (11)
		9.	Profit on ordinary activities before tax
		10.	Tax on [profit] [loss] on ordinary activities
		11.	Profit on ordinary activities after tax
		12.	Extraordinary charges
		13.	Tax on extraordinary [profit] [loss]
		14.	Extraordinary loss after tax
		15.	Other taxes not shown under the preceding items
		16.	Profit for the financial year
B.	Income
		1.	Interest receivable (1)
				(1)	Interest receivable and similar income arising from debt securities [and other fixed-income securities]
				(2)	Other interest receivable and similar income
		2.	Dividend income
				(a)	Income from equity shares [and other variable-yield securities]
				(b)	Income from participating interests
				(c)	Income from shares in group undertakings
		3.	Fees and commissions receivable (3)
		4.	Dealing profits (5)
		5.	Adjustments to provisions
				(a)	Adjustments to provisions for bad and doubtful debts (9)
				(b)	Adjustments to provisions for contingent liabilities and commitments (10)
		6.	Adjustments to amounts written off fixed asset investments (12)
		7.	Other operating income
		8.	Loss on ordinary activities before tax
		9.	Loss on ordinary activities after tax
		10.	Extraordinary income
		11.	Extraordinary profit after tax
		12.	Loss for the financial year

Notes on the profit and loss account formats

(1)	Interest receivable

(Format 1, item 1; format 2, item B1.)

This item is to include all income arising out of banking activities, including—

(a) income from assets included in assets items 1 to 5 in the balance sheet format, however calculated,

(b) income resulting from covered forward contracts spread over the actual duration of the contract and similar in nature to interest, and

(c) fees and commissions receivable similar in nature to interest and calculated on a time basis or by reference to the amount of the claim (but not other fees and commissions receivable).

(2)	Interest payable

(Format 1, item 2; format 2, item A1.)

This item is to include all expenditure arising out of banking activities, including—

(a) charges arising out of liabilities included in liabilities items 1, 2, 3 and 7 in the balance sheet format, however calculated,

(b) charges resulting from covered forward contracts, spread over the actual duration of the contract and similar in nature to interest, and

(c) fees and commissions payable similar in nature to interest and calculated on a time basis or by reference to the amount of the liability (but not other fees and commissions payable).

(3)	Fees and commissions receivable

(Format 1, item 4; format 2, item B3.)

Fees and commissions receivable are to comprise income in respect of all services supplied by the company to third parties, but not fees or commissions required to be included under interest receivable (format 1, item 1; format 2, item B1).

In particular the following fees and commissions receivable must be included (unless required to be included under interest receivable)—

(a) fees and commissions for guarantees, loan administration on behalf of other lenders and securities transactions,

(b) fees, commissions and other income in respect of payment transactions, account administration charges and commissions for the safe custody and administration of securities,

(c) fees and commissions for foreign currency transactions and for the sale and purchase of coin and precious metals, and

(d) fees and commissions charged for brokerage services in connection with savings and insurance contracts and loans.

(4)	Fees and commissions payable

(Format 1, item 5; format 2, item A2.)

Fees and commissions payable are to comprise charges for all services rendered to the company by third parties but not fees or commissions required to be included under interest payable (format 1, item 2; format 2, item A1).

In particular the following fees and commissions payable must be included (unless required to be included under interest payable)—

(a) fees and commissions for guarantees, loan administration and securities transactions;

(b) fees, commissions and other charges in respect of payment transactions, account administration charges and commissions for the safe custody and administration of securities;

(c) fees and commissions for foreign currency transactions and for the sale and purchase of coin and precious metals; and

(d) fees and commissions for brokerage services in connection with savings and insurance contracts and loans.

(5)	Dealing [profits] [losses]

(Format 1, item 6; format 2, items B4 and A3.)

This item is to comprise—

(a) the net profit or net loss on transactions in securities which are not held as financial fixed assets together with amounts written off or written back with respect to such securities, including amounts written off or written back as a result of the application of paragraph 33(1),

(b) the net profit or loss on exchange activities, save in so far as the profit or loss is included in interest receivable or interest payable (format 1, items 1 or 2; format 2, items B1 or A1), and

(c) the net profits and losses on other dealing operations involving financial instruments, including precious metals.

(6)	Depreciation and amortisation

(Format 1, item 9; format 2, item A5.)

This item is to comprise depreciation and other amounts written off in respect of balance sheet assets items 9 and 10.

(7)	Provisions: Provisions for bad and doubtful debts

(Format 1, item 11(a); format 2, item A7(a).)

Provisions for bad and doubtful debts are to comprise charges for amounts written off and for provisions made in respect of loans and advances shown under balance sheet assets items 3 and 4.

(8)	Provisions: Provisions for contingent liabilities and commitments

(Format 1, item 11(b); format 2, item A7(b).)

This item is to comprise charges for provisions for contingent liabilities and commitments of a type which would, if not provided for, be shown under Memorandum items 1 and 2.

(9)	Adjustments to provisions: Adjustments to provisions for bad and doubtful debts

(Format 1, item 12(a); format 2, item B5(a).)

This item is to include credits from the recovery of loans that have been written off, from other advances written back following earlier write offs and from the reduction of provisions previously made with respect to loans and advances.

(10)	Adjustments to provisions: Adjustments to provisions for contingent liabilities and commitments

(Format 1, item 12(b); format 2, item B5(b).)

This item comprises credits from the reduction of provisions previously made with respect to contingent liabilities and commitments.

(11)	Amounts written off fixed asset investments

(Format 1, item 13; format 2, item A8.)

Amounts written off fixed asset investments are to comprise amounts written off in respect of assets which are transferable securities held as financial fixed assets, participating interests and shares in group undertakings and which are included in assets items 5 to 8 in the balance sheet format.

(12)	Adjustments to amounts written off fixed asset investments

(Format 1, item 14; format 2, item B6.)

Adjustments to amounts written off fixed asset investments are to include amounts written back following earlier write offs and provisions in respect of assets which are transferable securities held as financial fixed assets, participating interests and group undertakings and which are included in assets items 5 to 8 in the balance sheet format.

(1)

A number in brackets following any item is a reference to the note of that number in the notes following the formats.