As a Sole Trader, Partnership or a Director of Limited Company you must keep appropriate books of prime entry to record the Revenue, Expenses the Assets of the company and its Liabilities.
Preparing and filing annual accounts is required by law, both by HMRC & Companies House in the UK. In Dubai these are required the assist the computation of your VAT and Corporation Tax Liabilities.
The format of these accounts is dependent on many factors, such as turnover, assets employed and other regulatory matters.
All private limited and public companies must file their accounts at Companies House. You must send Companies House a copy of the accounts you have already prepared for your members or shareholders.
A small company can prepare and submit accounts according to special provisions in the Companies Act 2006 and the relevant regulations. This means they can choose to disclose less information than medium and large companies.
Qualifying as a small company
For accounting periods that begin on or after 6 April 2025
A small company must meet at least 2 of the following conditions:
• an annual turnover no more than £15 million
• a balance sheet total no more than £7.5 million
• no more than 50 employees on average
For accounting periods beginning between 1 January 2016 and 5 April 2025
A small company must have met at least 2 of the following conditions:
• an annual turnover no more than £10.2 million
• a balance sheet total no more than £5.1 million
• no more than 50 employees on average
You cannot prepare and submit small company accounts if the company is, or was at any time during the financial year:
• A person who carries on insurance market activity Companies which would otherwise qualify as small, but which are members of ineligible groups, can still take advantage of the exemption from:
• Preparing a strategic report
• Filing the directors’ report at Companies House
For queries about financial services companies which are excluded from the small companies’ regime, we take guidance from Financial Conduct Authority.
Generally, a company qualifies as small in its first financial year if it meets the conditions in that year. In any following years, a company must meet the conditions in that year and the year before. If a company qualified as small in one year but no longer meets the criteria in the next year – it may continue to claim the exemptions available in the next year. If that company, then reverts to being small (by meeting the conditions in the following year) the exemption will continue uninterrupted.
Generally, a group qualifies as small in its first financial year if it meets the conditions in that year. In any following years, a group must meet the conditions in that year and the year before.
If a group qualified as small in one year but no longer meets the criteria in the next year – it may continue to claim the exemptions available in the next year. If that group, then reverts to being small (by meeting the conditions in the following year) the exemption will continue uninterrupted. For accounting periods that begin on or after 6 April 2025
A group of companies must meet at least 2 of the following conditions to qualify as small:
• An aggregate turnover no more than £15 million net (or £18 million gross)
• An aggregate balance sheet total no more than £7.5 million net (or £9 million gross)
• An aggregate average number of employees no more than 50
For accounting periods beginning between 1 January 2016 and 5 April 2025
A group of companies must have met at least 2 of the following conditions to qualify as small:
• An aggregate turnover no more than £10.2 million net (or £12.2 million gross)
• An aggregate balance sheet total no more than £5.1 million net (or £6.1 million gross)
• An aggregate average number of employees no more than 50
Contents of small company accounts
Small company accounts prepared for members usually include:
• A profit and loss account
• A balance sheet, signed by a director on behalf of the board and the printed name of that director
• Notes to the accounts
• Group accounts (if a small parent company chooses to prepare them)
Small company accounts should also be accompanied by:
Generally, a group qualifies as small in its first financial year if it meets the conditions in that year. In any following years, a group must meet the conditions in that year and the year before.
If a group qualified as small in one year but no longer meets the criteria in the next year – it may continue to claim the exemptions available in the next year. If that group, then reverts to being small (by meeting the conditions in the following year) the exemption will continue uninterrupted.
A group of companies must meet at least 2 of the following conditions to qualify as small:
A group of companies must have met at least 2 of the following conditions to qualify as small:
Small company accounts prepared for members usually include:
A directors’ report that shows the signature of a secretary or director and their printed name
The balance sheet must contain the following statement (in a prominent position above the director’s signature and printed name):
The accounts have been prepared in accordance with the special provisions applicable to companies subject to the small companies’ regime.
Small companies do not have to deliver a copy of the directors’ report or the profit and loss account to Companies House. If you choose not to deliver a copy of the profit and loss, the company must state this on the balance sheet.
The requirements for companies subject to the small companies’ regime are set out in Parts 15 and 16 of the Companies Act 2006. You can find more information on the detailed format and content of accounts for small companies in the relevant regulations.
The Companies Act 2006, and regulations also set out what the directors’ report of a small company must contain. It does not have to contain a business review or a statement of the amount the directors recommend be paid by way of dividend.
If the company has taken advantage of the small companies’ exemption in preparing the directors’ report, it must contain a statement to this effect above the director’s or secretary’s signature and printed name.
Small companies can also usually claim exemption from audit and submit unaudited accounts – if they meet the qualification criteria.
A small company which has chosen to not file its profit and loss account, may also choose not to file a copy of the auditor’s report on their accounts. In this case they must make the following disclosures in the notes to their accounts:
A parent company does not have to prepare group accounts or submit them to Companies House if the group qualifies as small (and is not ineligible).
If a small parent company decides to prepare group accounts, their content is prescribed by the Companies Act 2006 and Schedule 6 to the Small Companies and Groups (Accounts and Directors’) Report Regulations 2008.
If you prepare group accounts, they must contain a statement on the balance sheet (above the signature and printed name) confirming that:
The accounts are prepared in accordance with the provisions applicable to companies subject to the small companies’ regime.
Some companies do not need to have an audit. To qualify for audit exemption, a company must qualify as small during the financial year.
If a company qualifies as a micro-entity, it also qualifies as a small company. This means it can also qualify for audit exemption.
For accounting periods that begin on or after 6 April 2025, a company must meet at least 2 of the following:
Some companies do not need to have an audit. To qualify for audit exemption, a company must qualify as small during the financial year.
If a company qualifies as a micro-entity, it also qualifies as a small company. This means it can also qualify for audit exemption.
For accounting periods that begin on or after 6 April 2025, a company must meet at least 2 of the following:
The previous criteria apply, if your accounting period starts before 6 April 2025. See qualifying as a small company above. Some companies must have an audit and cannot take advantage of audit exemption. Even if a small company meets the criteria, it must still have its accounts audited if demanded by:
The demand for the audit of the accounts should be in the form of a notice to the company, deposited at the registered office at least one month before the end of the financial year in question. The notice may not be given before the financial year to which it relates.
If a small company qualifies for audit exemption, it can submit unaudited accounts to Companies House.
In either case, the balance sheet must contain wording to the effect of the following statements above the director’s printed name and signature:
For the year ending (dd/mm/yyyy) the company was entitled to exemption from audit under section 477 of the Companies Act 2006 relating to small companies.
The members have not required the company to obtain an audit of its accounts for the year in question in accordance with section 476.
The directors acknowledge their responsibilities for complying with the requirements of the Act with respect to accounting records and the preparation of accounts.
These accounts have been prepared in accordance with the provisions applicable to companies subject to the small companies’ regime.
However small companies and micro-entities can prepare an abridged version of those accounts which has less detail, by omitting certain balance sheet items.
If your company qualifies as dormant, you can deliver even simpler annual accounts to Companies House.
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