Part 15Accounts and reports
Chapter 1Introduction
Companies subject to the small companies regime
381Companies subject to the small companies regime
The small companies regime for accounts and reports applies to a company for a financial year in relation to which the company—
a
qualifies as small (see sections 382 and 383), and
b
is not excluded from the regime (see section 384).
382Companies qualifying as small: general
1
A company qualifies as small in relation to its first financial year if the qualifying conditions are met in that year.
2
A company qualifies as small in relation to a subsequent financial year—
a
if the qualifying conditions are met in that year and the preceding financial year;
b
if the qualifying conditions are met in that year and the company qualified as small in relation to the preceding financial year;
c
if the qualifying conditions were met in the preceding financial year and the company qualified as small in relation to that year.
3
The qualifying conditions are met by a company in a year in which it satisfies two or more of the following requirements—
1. Turnover | Not more than £5.6 million |
2. Balance sheet total | Not more than £2.8 million |
3. Number of employees | Not more than 50 |
4
For a period that is a company’s financial year but not in fact a year the maximum figures for turnover must be proportionately adjusted.
5
The balance sheet total means the aggregate of the amounts shown as assets in the company’s balance sheet.
6
The number of employees means the average number of persons employed by the company in the year, determined as follows—
a
find for each month in the financial year the number of persons employed under contracts of service by the company in that month (whether throughout the month or not),
b
add together the monthly totals, and
c
divide by the number of months in the financial year.
7
This section is subject to section 383 (companies qualifying as small: parent companies).
383Companies qualifying as small: parent companies
1
A parent company qualifies as a small company in relation to a financial year only if the group headed by it qualifies as a small group.
2
A group qualifies as small in relation to the parent company’s first financial year if the qualifying conditions are met in that year.
3
A group qualifies as small in relation to a subsequent financial year of the parent company—
a
if the qualifying conditions are met in that year and the preceding financial year;
b
if the qualifying conditions are met in that year and the group qualified as small in relation to the preceding financial year;
c
if the qualifying conditions were met in the preceding financial year and the group qualified as small in relation to that year.
4
The qualifying conditions are met by a group in a year in which it satisfies two or more of the following requirements—
1. Aggregate turnover | Not more than £5.6 million net (or £6.72 million gross) |
2. Aggregate balance sheet total | Not more than £2.8 million net (or £3.36 million gross) |
3. Aggregate number of employees | Not more than 50 |
5
The aggregate figures are ascertained by aggregating the relevant figures determined in accordance with section 382 for each member of the group.
6
In relation to the aggregate figures for turnover and balance sheet total—
“net” means after any set-offs and other adjustments made to eliminate group transactions—
- a
in the case of Companies Act accounts, in accordance with regulations under section 404,
- b
in the case of IAS accounts, in accordance with international accounting standards; and
- a
“gross” means without those set-offs and other adjustments.
A company may satisfy any relevant requirement on the basis of either the net or the gross figure.
7
The figures for each subsidiary undertaking shall be those included in its individual accounts for the relevant financial year, that is—
a
if its financial year ends with that of the parent company, that financial year, and
b
if not, its financial year ending last before the end of the financial year of the parent company.
If those figures cannot be obtained without disproportionate expense or undue delay, the latest available figures shall be taken.
384Companies excluded from the small companies regime
1
The small companies regime does not apply to a company that is, or was at any time within the financial year to which the accounts relate—
a
a public company,
b
a company that—
i
is an authorised insurance company, a banking company, an e-money issuer, an ISD investment firm or a UCITS management company, or
ii
carries on insurance market activity, or
c
a member of an ineligible group.
2
A group is ineligible if any of its members is—
a
a public company,
b
a body corporate (other than a company) whose shares are admitted to trading on a regulated market in an EEA State,
c
a person (other than a small company) who has permission under Part 4 of the Financial Services and Markets Act 2000 (c. 8) to carry on a regulated activity,
d
a small company that is an authorised insurance company, a banking company, an e-money issuer, an ISD investment firm or a UCITS management company, or
e
a person who carries on insurance market activity.
3
A company is a small company for the purposes of subsection (2) if it qualified as small in relation to its last financial year ending on or before the end of the financial year to which the accounts relate.