Filed Accounts Medium-Sized Company
Understanding Filed Accounts for a Medium-Sized Company as Listed with Companies House
In the UK, medium-sized companies have specific accounting and reporting obligations that fall between the simplified requirements for small companies and the more detailed filings required for large corporations. Filing medium-sized accounts with Companies House ensures financial transparency while allowing for certain company filings exemptions that help reduce the administrative burden.
This article explains the key aspects of filed accounts for a medium-sized company, the legislative requirements, and how recent changes in UK law impact medium-sized businesses.
What Qualifies as a Medium-Sized Company?
A company qualifies as medium-sized if it meets two out of the following three criteria for two consecutive financial years:
- Annual Turnover: Not more than £36 million.
- Balance Sheet Total: Not more than £18 million.
- Number of Employees: Not more than 250.
Medium-sized companies benefit from some exemptions when it comes to financial reporting, but they are still required to file more comprehensive accounts than small companies. It is important to understand the components of medium-sized accounts and the necessary company filings to ensure compliance with UK law.
Filed Accounts for a Medium-Sized Company
Medium-sized companies must file full annual accounts with Companies House. These accounts are more detailed than those for small companies but benefit from certain filing exemptions compared to large companies. The medium-sized accounts include:
1. Balance Sheet
The balance sheet provides a snapshot of the company’s financial position at the end of the accounting period. It includes details of the company’s assets, liabilities, and equity.
- Exemptions for medium-sized companies: While the balance sheet is mandatory, medium-sized companies can file a simplified version that omits certain disclosures, such as the breakdown of staff costs and certain asset-related information.
2. Profit and Loss Account (Income Statement)
The profit and loss account shows the company’s financial performance over the financial year, including income, expenses, and profits.
- Exemptions for medium-sized companies: Unlike large companies, medium-sized companies are not required to include detailed breakdowns of revenue or disclose specific financial instruments in the income statement.
3. Notes to the Accounts
Notes to the accounts are essential for explaining the figures in the financial statements. These notes provide additional details about accounting policies, key transactions, and other relevant information.
- Reduced disclosures: Medium-sized companies can benefit from reduced disclosures in the notes, such as less detailed information on financial instruments or employee numbers, compared to larger companies.
4. Directors’ Report
The directors’ report must accompany the financial statements and includes an overview of the company’s principal activities, business review, and key risks. It must also report on matters such as dividends, future developments, and significant events during the year.
- Exemptions for medium-sized companies: Medium-sized companies can file a simplified directors’ report, with fewer requirements for reporting on corporate governance and executive pay compared to larger companies.
5. Audit Requirement
Most medium-sized companies are required to have their accounts audited by an independent auditor, who will provide an audit report confirming the accuracy and compliance of the financial statements.
- Are there any exemptions? Medium-sized companies may still qualify for an audit exemption if they are part of a small group or meet certain other conditions. However, most medium-sized companies will require an audit.
Filing Deadlines for Medium-Sized Companies
Medium-sized companies are required to file their accounts within nine months of the end of their financial year. Failing to file accounts on time can result in penalties from Companies House, with fines ranging from £150 to £1,500 depending on how late the accounts are filed.
Recent Legislative Updates
Recent changes to UK legislation have affected the filing requirements for medium-sized companies, particularly around transparency and corporate governance.
Companies (Miscellaneous Reporting) Regulations 2018
The Companies (Miscellaneous Reporting) Regulations 2018 introduced enhanced reporting obligations for large and medium-sized companies. These include reporting on non-financial matters such as employee engagement, environmental impact, and business relationships. However, medium-sized companies are exempt from some of these reporting obligations, particularly when it comes to the level of detail required.
Economic Crime (Transparency and Enforcement) Act 2022
The Economic Crime (Transparency and Enforcement) Act 2022 has introduced stricter transparency requirements, which apply to all company sizes. Medium-sized companies must ensure they disclose their Persons of Significant Control (PSC), providing information on individuals or entities that hold significant influence or control over the company.
Benefits of Filing as a Medium-Sized Company
Filing medium-sized accounts offers several benefits, both in terms of compliance and business transparency:
- Credibility and Transparency: Filing comprehensive accounts ensures that the company meets its legal obligations and builds trust with stakeholders, including investors, creditors, and potential business partners.
- Simplified Reporting: While medium-sized companies must provide detailed financial information, the exemptions they are eligible for help reduce the reporting burden, allowing them to avoid disclosing highly detailed financial data in certain areas.
- Cost Savings: The ability to file simplified accounts and benefit from some audit exemptions can help medium-sized businesses reduce the costs associated with compliance.
Conclusion
Filed accounts for a medium-sized company must include a balance sheet, profit and loss account, notes to the accounts, and a directors’ report, but medium-sized companies benefit from certain exemptions that simplify the process. Although audit requirements generally apply, medium-sized companies still enjoy some relief compared to larger corporations when it comes to disclosing detailed financial information.
Useful Links
- Companies House – Medium-Sized Company Accounts Guidance This official guide explains the requirements for filing medium-sized company accounts and details available exemptions.
- Audit Requirements and Exemptions for Medium-Sized Companies – GOV.UK This resource outlines the audit requirements for medium-sized companies and explains when audit exemptions may apply.
- Companies (Miscellaneous Reporting) Regulations 2018 This legislation introduces enhanced reporting obligations for large and medium-sized companies, including governance and transparency requirements.
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