As with a small company, a medium-sized company is determined by its turnover, balance sheet total (meaning the total of the assets) and the average number of employees. A medium-sized company can prepare accounts according to special provisions applicable to medium-sized companies. It can also choose to submit reduced information to Companies House.

Conditions to qualify as a medium-sized company

To be a medium-sized company, they must meet at least two of the following conditions:

• annual turnover must be no more than £36 million
• the balance sheet total must be no more than £18 million
• the average number of employees must be no more than 250.

Entities that cannot prepare and submit medium-sized company accounts

A company cannot be treated as a medium-sized company if it is, or was at any time during the financial year, one of the following:

• a public company
• a company that has permission under Part 4 of the Financial Services and Markets Act 2000 to carry on a regulated activity or that carries on an insurance market activity
• a member of an ineligible group

A group is ineligible if any of its members is:

• a public company
• a body corporate (other than a company) whose shares are admitted to trading on a regulated market
• a person (other than a small company) who has permission under Part 4 of the Financial Services and Markets Act 2000 to carry on a regulated activity
• a small company that is an authorised insurance company, a banking company, an e-money issuer, a MiFID (ie Markets in Financial Instruments Directive) investment firm or a UCITS (i.e.Undertakings for Collective Investment in Transferable Securities) management company
• a person who carries on insurance market activity

Qualifying as a medium-sized company every year

Generally, a company qualifies as ‘medium-sized’ in its first accounting period if it fulfils the conditions in that period. In any subsequent period, a company must fulfil the conditions in that period and the period before.

However, if a company which qualified as medium-sized in one period no longer meets the criteria in the next period, it may continue to claim the exemptions available for the following period. If the company then reverts back to being medium-sized by meeting the criteria the exemption will continue uninterrupted.

Contents of a medium-sized company’s filed accounts

Medium-sized accounts must include:

• a profit and loss account
• a balance sheet, showing the printed name and signature of a director
• notes to the accounts
• group accounts (if appropriate)

And should be accompanied by:

• a directors’ report including a business review (or strategic report) showing the printed name of the approving secretary or director
• an auditor’s report that includes the name of the registered auditor unless the company is exempt from audit

A medium-sized company must deliver all of the constituent parts of their accounts to Companies House.

Medium-sized groups

There are no special rules for medium-sized groups. A medium-sized parent company must prepare group accounts and submit them to Companies House.