Accounts and record keeping
Statutory accounts
All companies irrespective of their size must file statutory accounts each year.
They are prepared using the information found in a company’s financial records at the end of each financial year.
All companies in the UK are legally obliged to send copies of their statutory accounts to:
- their shareholders
- anyone who can go to their annual general meeting
- HMRC
- Companies House (unless they send abbreviated accounts).
All statutory accounts must include a balance sheet that shows the value of everything the company owns, what it owes and how much it is owed.
They should also include:
- a profit and loss report showing the company’s sales, costs and the profits or losses it has made over the financial year
- a director’s report
- notes about the accounts.
Some companies will also have to include an auditor’s report.
Statutory accounts must meet UK GAAP or International Financial Reporting Standards.
Record keeping
It is a legal requirement for a company to keep and maintain accurate financial records.
If a company fails to keep accounting records it can be fined up to £3,000. Any discrepancies which come to light in the event of an inspection might also lead to further investigation by HMRC and Companies House.
The accounting records which a company must keep are as follows:
- all money spent and received
- all assets owned by the company
- debts the company is owed or owes
- stock owned at year end
- all goods purchased and sold
- who goods were purchased from or sold to, unless the business is a retailer.
These records must be kept for a minimum of 6 years (though there are some cases where they will need to be kept for longer).
The company must immediately notify their Corporation Tax Office and try to accurately recreate them if records are destroyed.
Penalties and deadlines
If a private limited company is late filing annual accounts with Companies House it will have to pay a penalty. The penalties are on a sliding scale and are doubled if a company files late 2 years in a row:
| Timescale | Penalty
|
| Up to 1 month | £150 |
| 1 – 3 months | £375 |
| 3 – 6 months | £750 |
| More than 6 months | £1,500 |
A company can appeal a penalty but must give a credible reason for filing late and prove that circumstances beyond anyone’s control e.g. a fire or flood destroyed them a few days before filing. Companies House will only accept circumstances that are deemed ‘exceptional’ so delays in postal delivery, illness and being unfamiliar with the process will not be considered.
