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What Are Abridged Accounts?

What Are Abridged Accounts

There are different sets of accounts that you may need to file with the Companies House, whether it be dormant accounts, full accounts, micro-entity accounts, and of course, abridged accounts.

But what exactly are abridged accounts? What’s included in them? And when do you file them with HMRC? This blog post will discuss all things abridged accounts and how you can prepare them.

 

Why Were Abridged Accounts Introduced?

Before abridged accounts, there were ‘abbreviated accounts’. These accounts were a much shorter version of full accounts. This meant companies didn’t have to file a copy of their profit and loss accounts.

However, abbreviated accounts were abolished on 1st January 2016 as the minimal level of disclosure had the potential for fraudsters wishing to present a false image of the company.

Soon after, abridged accounts were introduced as a replacement for abbreviated accounts. They essentially serve the same purpose – they provide a simplified version of a company’s full statutory accounts. They are intended to make financial reporting more straightforward for smaller companies.

These accounts require far less information than regular full accounts, making them ideal for small businesses that don’t have much financial information or businesses that would rather limit the amount of financial information that the public can get hold of.

 

What Should I Include In Abridged Accounts?

Abridged accounts require less information and detail than full accounts – and this is mostly because they don’t require a breakdown of the items included on your balance sheet.

However, you do need to include the full balance sheet and any notes that are relevant to the balance sheet total.

The balance sheet must include the director’s name printed on it and also be signed by the director. You can also choose whether you want to include a simpler profit and loss account and copy a director’s report.

Unlike full accounts, abridged accounts don’t require a breakdown of your business’s creditors, debtors, and fixed assets, which also means that you don’t have to disclose information on your corporate tax figures.

This is perfect if you don’t want your business’s competitors to guess your net profit and you want to keep your corporation tax figures private.

 

Do I File Abridged Accounts With HMRC?

Yes – companies in the UK are required to file abridged accounts with HM Revenue and Customs (HMRC) as part of their annual reporting obligations.

You should file these accounts with the Companies House – the UK government agency responsible for maintaining company records.

HMRC utilises these abridged accounts for tax assessment purposes. Keep in mind that to file for an abridged account, you must meet the following criteria:

  • A Turnover of £10.2 million or less
  • £5.1 million or less on its balance sheet
  • Average of 50 employees or less

 

Your business must meet at least two of these. However, you must only send an abridged account if all the members of your company agree.

In these accounts, you’re required to include a statement on the balance sheet that states that all your company members have agreed to abridge the accounts.

 

What About Micro Entity Accounts?

Micro entity accounts are a specific type of abridged account tailored for smaller companies. They are perfect for micro companies as they’re easier to submit than abridged accounts and of course, full accounts.

With a micro-entity account, you’ll only need to prepare your balance sheet as well as the profit and loss account – and these will be in less detail than an abridged account. However, your business will need to meet certain criteria in order to file a micro-entity account.

More specifically, your business will need to meet just two of the three requirements. First of all, you can only file a micro-entity account if you have:

  • A turnover of £632,000 or less.
  • £316,000 or less on its balance sheet.
  • 10 employees or less.

 

Abridged Accounts FAQs

A: Yes, they must be signed by a director.

A: No, there is no legal requirement for this. However, utilising an accountant service like LJS Accounting Services can be very beneficial as an accountant can perform valuable and accurate services like filing annual accounts and corporation tax returns. Contact us today for more information.

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