Accounts and returns


This cross-cutting theme is now closed for comments.

You can read comments made since the start of the Red Tape Challenge in April 2011 below.

You can also still submit comments to the Red Tape Challenge inbox by clicking here.

These regulations set out the content, form and auditing requirements of the financial accounts and other reports that companies have to produce.

You can find the regulations that relate to accounts and returns below to the left.

The Companies Act 2006 (Transfer of Audit Working Papers to Third Countries) Regulations 2010

Amends provisions in Companies Act 2006 on the transfer of audit working papers to third country audit regulators. Implements Commission Decision under the Audit Directive.

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EU

The Companies Act 2006 (Accounts, Reports and Audit) Regulations 2009

Implements EU Accounting Directives.

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EU

The Companies Act 2006 (Annual Return and Service Addresses) Regulations 2008

Details the information to be provided in the annual return of a company and prescribes conditions to be met by a service address (as defined in section 2 of the Companies Act 2006).

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EU Domestic

The Statutory Auditors and Third Country Auditors (Amendment) (No. 2) Regulations 2008

Amends regulations on registration of auditors of companies outside the European Economic Area which issue securities on UK markets.

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EU

The Large and Medium-sized Limited Liability Partnerships (Accounts) Regulations 2008

Sets out the form and content of accounts for medium and large sized LLPs. Allows abbreviated accounts for mediums.

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Domestic

The Small Limited Liability Partnerships (Accounts) Regulations 2008

Specifies the form and content of the accounts of limited liability partnerships (LLPs) who can take advantage of the small LLPs regime.

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Domestic

The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008

Applies accounting and audit rules from Companies Act 2006 to LLPs.

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Domestic

The Accounting Standards (Prescribed Body) Regulations 2008

Establishes the Accounting Standards Board under the articles of association of The Financial Reporting Council.

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Domestic

The Companies (Defective Accounts and Directors’ Reports) (Authorised Person) and Supervision of Accounts and Reports (Prescribed Body) Order 2008

Establishes the Financial Reporting Review Panel under the articles of association of the Financial Reporting Council.

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Domestic

The Partnerships (Accounts) Regulations 2008

Applies 4th and 7th Company Law Directive accounting framework and Audit Directive to those partnerships and limited partnerships where all members have limited liability.

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EU

The Statutory Auditors and Third Country Auditors (Amendment) Regulations 2008

Corrects errors in the Statutory Auditors and Third Country Auditors Regulations 2007.

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EU

The Statutory Auditors (Delegation of Functions etc) Order 2008

Delegates most of the Secretary of State’s functions under Part 42 of the Companies Act 2006 (statutory auditors etc) to the Professional Oversight Board of the Financial Reporting Council.

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EU

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

Specifies the form and content of the accounts and reports of companies other than for the small companies regime.

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EU

The Small Companies and Groups (Accounts and Directors’ Report) Regulations 2008

Defines “small companies regime” including the form and content of the individual accounts.

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EU

The Companies Act 2006 (Amendment) (Accounts and Reports) Regulations 2008

Raises thresholds for qualifying as a small or medium-sized company or group for certain accounting and audit exemptions.

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EU

The Companies (Summary Financial Statement) Regulations 2008

Enables companies to send out summary financial statements in place of their full accounts and reports.

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Domestic

The Companies (Revision of Defective Accounts and Reports) Regulations 2008

Sets out requirements for preparing revised annual accounts, directors’ reports, directors’ remuneration reports and summary financial statements.

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Domestic

The Independent Supervisor Appointment Order 2007

Appoints the Professional Oversight Board as Independent Supervisor of the Auditors General.

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EU

The Statutory Auditors and Third Country Auditors Regulations 2007

Completes the UK’s original implementation of the Audit Directive.

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EU

The Companies (Principal Business Activities) (Amendment) Regulations 2002

Amends a form and prescribes the system of classifying business activities in its annual return using the Standard Industry Classification 1992

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Domestic

The Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002

Allows creditors to apply statutory interest rates on certain debts.

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EU

The Late Payment of Commercial Debts Regulations 2002

Repeals the Secretary of State’s power to specify excepted categories of contracts where late payment interest is not to be payable; and the corresponding Order.

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EU

The Companies (Principal Business Activities) (Amendment) Regulations 1996

Prescribes the system of classifying business activities in its annual return using the Standard Industry Classification 1992.

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Domestic

The Companies Act 1985 (Audit Exemption) Regulations 1994

Exempts small companies from having their accounts audited under the Companies Act 1985. Includes consequential amendments to other legislation still in force.

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Domestic

Tell us what you think should happen to these regulations and why, being specific where possible:

75 responses to Accounts and returns

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    Maureen Treadwell said on October 14, 2011 at 7:40 am

    Abolish NI and add it to Tax It is a hugely bureaucratic exercise for small businesses to manage and discourages employment.

    Comment Tags: Abolish NI

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      Ellie Goddard said on March 4, 2012 at 3:04 pm

      If not abolish them then at least put on a par with income tax and put into self assessment – that would negate the need for Class 2 and Class 4 applications for exception or deferment, which are really time consuming for the self-employed who are really hit by the ridiculous admin of NIC – far worse that for employers for whom software does most of the work.

      Comment Tags: NIC, Tax

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    John Sydenham said on October 12, 2011 at 12:05 pm

    I would like to see “Employers National Insurance Contributions” and “Employees NIC” combined with ordinary taxation. The abandonment of the “stamp” and the creation of employer’s NIC were just scams to raise tax without raising income tax. These scams now involve employers and accountants in hours of unnecessary bookkeeping.

    Comment Tags: national insurance

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    John Inglis said on October 12, 2011 at 11:06 am

    Close the HMRC CT filing website. It is an abomination. I have assisted a few companies with this filing and I’ve developed a CRIB SHEET. Yet I have still been unable to complete a filing in less that three hours! I’ve know one small company’s accountant (5 employees and £2m turnover) take 5 hours and he still has not got to submission. Why should small (or even large) companies be forced to comply with such costs. Following this, HMRC have instituted the Business Record Checks for hundreds of thousands of small companies which, contrary to their stated code of practice, begins from the assumption that the companies are actively evading their tax liabilities.

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    Malcolm Pott said on September 21, 2011 at 11:18 am

    As from April this year Corporation Tax returns must be submitted to HMRC in iXBRL format. This results in increased accountancy costs for which companies must pay. Most small companies are looking to make savings where they can to offset increased costs e.g. fuel and transport. When additional regulatory costs are imposed upon SMEs in a recessionary environment, it is very frustrating and helps defeat the Government’s objectives of increasing business efficiency to dig us out of the country’s financial hole. This piece of government regulation should have been delayed or a financial incentive given for implementing it, similar to filing PAYE on line.

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    Geoff Allen said on September 12, 2011 at 4:02 pm

    We are a small,private group of companies with a consolidated turnover of under £14 million. We are now required to provide consolidated accounts for the group at a cost of over £15,000 p.a., even though no-one will gain any value from them. Each individual company files accounts with both Companies House and HMRC, the shareholders and Directors don’t need them, suppliers and customers look at the individual company accounts, so why do we need to prepare and file them.

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    JE Cutler said on August 1, 2011 at 11:49 am

    The 2006 Companies Act allows small companies to dispense with the need to file a Directors Report with the published statutory accounts. But if you do not file one, guess what? HMR&C demand one! What nonsense! I am told by one tax inspector that this is a policy dictated by some overpaid bureaucrat at the top of HMR&C and they are forced to enforce. So much for cutting red tape!

    Comment Tags: Directors Report

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    Jeffrey Jesner said on July 28, 2011 at 11:12 am

    SIMPLIFY TAX!!! Thousands of pages of tax legislation and hundreds of different acts. Even accountants struggle to keep up, so what chance does the ordinary layman have?

    Comment Tags: simplify, Tax, taxation

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    Jeffrey Jesner said on July 28, 2011 at 11:03 am

    For audit size purposes, balance sheet is valued on total assets instead of net assets. Total assets can include premises which are held on mortgages or equipment bought through hire purchase, but mortgages and hire purchase are ignored for determining audit size. This is illogical and the criteria should be changed to net assets. It would also be helpful to increase the employees limit from 50 to at least 100 which would benefit manufacturing companies, an area that needs stimulating. The only people the current criteria helps are auditors. It would be more beneficial for accountants to spend time helping companies grow than to it is to spend that time conducting an audit. CPAs in America get very involved with clients businesses. We need to encourage the same here.

    Comment Tags: audit, net assets

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    Jonathan Crewdson said on July 28, 2011 at 8:17 am

    Further to my last post about all organisations adopting a common single annual return, I forgot to mention that the Company Tax Return should also be incorporated into the same document. At present IPSs along with all other types of organisation have to submit a separate tax return to HMRC through their clunky website which doesn’t always work and can be confusing. If all the information was just put in one form it could then be received by Companies House and referred on to HMRC and any other specialist authorities as needed from there.

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    Jonathan Crewdson said on July 28, 2011 at 8:15 am

    The model for annual returns for ordinary companies is different to industrial and provident societies (IPS) and they vary also according to the type of IPS they are plus they submit their’s to the FSA rather than Companies House. Also charities have to submit another annual return to the Charity Commission and if a company is registered as a community interest company (CIC) it must submit a further return to the CIC Regulator.

    It would be better if there was just one model return for ALL types of organisation and ALL were sent to the same place, probably Companies House as the most user friendly of them all and with all their systems online. The same form could be used but with different tick boxes to identify what type of company it was etc.

    Also ordinary companies, CICs and charities have to advise every time there is a change of director or trustee while IPSs do not – they simply submit all changes on one annual return and keep their own internal records in the meantime. It would be less burdensome on all organisations if they also just adopted the single annual return approach like IPSs.

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    Alistair Schofield said on July 22, 2011 at 6:56 am

    I am a Director of two relatively small limited companies. We use a full accounting package to run all of our accounts and payroll but have to employ an accountant at the end of each year to translate our comprehensive accounts into the format required by the Government.

    It strikes me that the process could be simplified greatly and the cost burden on small businesses reduced if small companies could be treated differently.

    My suggestion is that Government liaise with the producers of software packages such as Sage and Quickbooks to simplify the reporting requirements such that those packages would be capable of producing the completed account submissions.

    I believe this would be eminently achievable as those packages currently do just that for the submission of VAT returns and calculation of Income Tax and NI for employees.

    As part of this I further suggest that a limit be set below which capital equipment purchase could be written off in full at the time of purchase (e.g. £10k in each year) thereby avoiding the complexity of depreciation.

    These changes would reduce the accounting cost burden on small businesses and bring the annual return in line with the way in which small companies measure themselves i.e. money in less money out.

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    Terry Swainbank said on July 19, 2011 at 11:12 am

    Why is there no review of what HMRC are up to? As an example they now require corporateion rax and annual accounts to be submitted in iXBRL format. They provide wholly inadequate templates and therefore professional help is needede. I have been quoted £700 for a company with which I am associated. A straightforward transfer of cost from HMRC to business. Companies House are going down the same path from next year.

    Comment Tags: HMRC iXBRL

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    Stella H Howell said on July 11, 2011 at 10:52 am

    When a Company has not commenced trading and says so, it is absolutely crazy for Companies House to :
    a) Issue a Fine to the business for not submitting accounts on time;
    b) to appoint Solicitors for debt recover;
    c) to issue County Court Claims (as at today £215 based on ‘thin air!’.

    Do they lack basic common sense.
    Why do they not believe when one states the business has not commenced trading.
    The business does not even have a Bank account.

    It is an extreme sad state of affairs when Companies House lacks mental intelligence.
    Besides the above, it is unknown what reprecussions such actions have on the individuals name which prevents them from establishing another business be it a limited organisation, or self employed.
    Such monoply of power from Companies House MUST be stopped immediately.
    (I question who are the favoured Debt collectors namely Howard Cohen & Co. with a PO Box No. in Cleckheaton,, W Yorks).
    Instead of me focusing on establishing the business, though innocent, I am caught up in this ridiculous situation.

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    Duncan Clark said on June 30, 2011 at 8:18 pm

    I am self employed and due to a mixture of a serious illness and a mental health illness, my ability to work currently is severely effected, I hope this will change. I have found the online Tax Return system very difficult to navigate, and although it’s a wonderful idea, not easy to use. I tried to discuss and seek help from the tax agency but sadly my concerns were not listened to, although the people were very polite.

    The crux of my suggestion relates to how different benefit agencies and council manage their information forms they request from people. Although councils and tax departments have differing needs and so customise their paperwork in a manner that suits them personally, would it not improve things to have a degree of commonality in terms of format. The details of my earnings have to be filled out one way for the council and another way for the benefit agency. This confusing, and inefficient.

    Furthermore when requesting my ESA, DLA, and JSA Benefit details from the benefit agency I have to make three different calls. This leads to confusion and inefficiency and waste of your resources.

    There seems to be a disconnected between benefit agencies, councils and government tax departments. One might respond that my view is an idealist view. In response I would say that can’t the government strive for excellence and understand the stress caused by this type friction and disorganisation.

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    Les Hodgson said on June 24, 2011 at 1:36 pm

    I am unsure why Companies House requires accounts and the annual return to filed seperately?
    It was seem fairly easy to extend the Annual accounts to have a separate section covering the annual return – it is all public information anyway.

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      Shirley Hamilton said on September 3, 2011 at 7:51 pm

      I agree with this comment. I have the onerous job of both Annual Return and Accounts, for a non-trading Small Company which was only formed to buy the Freehold of 4 flats from a difficult Landlord. Last year they would not accept my account because I used the information about regulations from a previous submission, and the relevant sections had been changed. I am not an Accountant and we have no bank account, so why did I get fined £150, because they sent my account back and then it was submitted late. It is not a fair system for people such as ourselves.

      Comment Tags: Birmingham, LadySec.

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    Stephen Hewlett said on June 22, 2011 at 2:26 pm

    The legislation for submitting accounts and tax returns is disproportionately and unnecessarily burdonsome to the smallest companies, especially those run by people setting up on their own who are from poor backgrounds on the tiniest of budgets.

    I’m talking about people like me, who are desperately trying to run their own businesses, but are not making much money yet and cannot afford an accountant, and sometimes cannot afford the time to fill out the endless pointless forms for the government. Right now I consider the government my biggest enemy in running my business.

    If I make a mistake – like missing a filing deadline – I get charged penalties the same as anyone else – £100, £150, whatever it is. To most people these are “slap on the wrist” amounts of money, but to me they are life-threatening sums that take away money for food and shelter. I’m being charged a penalty at the moment by companies house for filing my “nil” accounts five days late, at a time when I was facing losing my home, fighting for my income and had other things on my mind than filing accounts that contained practically no figures. The accounts were almost all zeros – apart from some depreciation – as I wasn’t trading that year. No-one would have been interested in them at all, especially within the five day period over which they were late. I can’t afford to pay the penalty and now I’m facing bailiffs coming round – researching which has taken up more of my time that I cannot afford to lose – all because of government bureaucracy. I have never been late paying any tax I am due to pay but my life circumstances have made it almost impossible to keep up with the paperwork saying that I don’t owe anything. I can’t even afford the court fees for applications that might help the situation, and businesses are not eligible for any help with these as there is automatic assumption that they can afford them.

    ***

    The smallest companies, run by the poorest people, should be able to make one simple declaration – “I don’t owe any tax this year and my income is below (for example) £15,000″, and then be exempt from all the paperwork. No PAYE forms, no Corporation Tax forms, no Business Rate relief forms, no companies house accounts. There is no point to any of those things for the smallest companies.

    Filing penalties, if they should exist at all, should be linked to the profit the company has made – not a flat fee – so if I was late I should pay a fair amount for my circumstances, which would be in the order of £1.50, not £150.

    ***

    Also, the government should provide free accountancy services to the smallest businesses. I had to guess the answers to some of the questions on the corporation tax return, and even the way accounts are prepared is counter-intuitive for a lot of people. A non-specialist couldn’t have a hope of understanding some of the questions on the CT600 and the tax office just say “seek the advice of an accountant”, which is unaffordable for me. The government should focus on helping people with the paperwork, but at the moment they are just interested in charging you when you can’t do it and offer zero help.

    A tax office should be somewhere helpful and friendly where someone knowledgeable can go through accounting with you if you don’t understand it, and where the aim should be to help honest businesspeople to meet their obligations rather than catching them out and punishing them accutely.

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    Jonathan Gittings said on June 20, 2011 at 10:19 am

    As someone who has set up both a limited company, and later a charitable company that became a registered charity it is frustrating, time-consuming and complicated to send annual returns/accounts to three different government departments. Firstly, despite now being a charity we are a company (limited by guarantee) therefore our accounts have to be filed with Companies House. Next is the return for Corporation Tax (which is always zero but for this year we have been issued a penalty of £300 because it was late – another matter that we be dealt with), and finally there is the return to the Charity Commission.
    Far better that this information – and all information regarding appointments, amendments, etc is sent to one organisation and they then circulate to others. It is not acceptable that the DPA is used to prevent this when if criminal activity is suspected the DPA is wavered anyway.

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      Mark Stoddart said on October 13, 2011 at 1:20 pm

      Totally agree with this comment, also misses the fact that often charities have to set up separate trading companies if they have “non Core” business so the whole lot has to be done twice.

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    Victor Jones said on June 5, 2011 at 12:51 am

    We have the most complex accounts and returns regime for businesses in the world. Small businesses are spending a huge proportion of their time to deal with all the accounts and employee rights legislation. This is severely damaging small businsesses productivity and, as a result, the British economy. Simplify the tax regime and obligations on employers please.

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    Martin P said on May 24, 2011 at 8:23 pm

    Registered Charities many of whom are also Companies should not have to pay VAT when they provide services to each other – this creates bureaucracy for charities and it is just government taking from people who have given donations – hardly in line with the Big Society aims either.

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    Robert Fitzsimmons MILSA said on May 17, 2011 at 11:12 am

    Cannot find anything directly concerned with MLR regulations, but I like all other stock takers in the hospitality industry, have been swallowed up by this act, although we do not see or handle cash we are still expected to pay an annual fee to check on something that we do not do. Members of the ILSTA met with Gov officials in Nov 2010, and we are still awaiting news of the officials deliberations, an incredible delay and waste of time money and effort.

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