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UK Contractor accounts -annual limited company accounts

Company annual accounts


The Companies House annual company accounts (UK) are a set of UK company financial statements. Every UK limited company will prepare year-end accounts on an annual basis. A contractor company’s financial accounts are effectively an annual summary of its finances. Therefore, every year, one of the director’s responsibilities for a UK contracting company is to file annual accounts with Companies House and HM Revenue & Customs (HMRC). Some UK contractors who are good at accounting may file their contractor accounts themselves, although many will trust the services of a contractor accountant.

In this article, we will look at accounts for limited companies and what is involved in the preparation of these. We will pay a particular focus on small companies as these are what contractors use for their services. In addition, we will take a look at the pages in a set of official contractor’s accounts and what to file with the UK authorities.

Initial thoughts -contractor accounts 

The main reasons for preparing accounts

The primary reasons for the preparation of year-end accounts for your contracting company are to:

  • Report your figures to the UK authorities -Companies House and HMRC.
  • Report your results to your company’s shareholders.

As mentioned, your contractor financial statements are prepared on an annual basis, and your accountant will usually for this for you.

Annual filing

Whether you are a contractor or small business owner, you must be aware of company annual accounts once you form your company. However, you do not have to file the year-end accounts with Companies House and HMRC until at least a year in the future.

There are two main documents to file with Companies House on an annual basis. Besides the annual contractor accounts, the other document is a Confirmation Statement (this is formerly known as the `Annual Return’).

Company director responsibilities

Limited company contractors are also company directors and they have certain responsibilities. In addition, when they run a UK company they also a number of director duties too. One key task is to ensure that they prepare small company accounts for your contractor company’s financial year once per annum. As a director, you are also legally responsible for ensuring that you file the contractor accounts with the UK authorities each year. It is also important to ensure that these are on time.

Limited company annual accounts -the size of a company 

Initial considerations

When we prepare statutory accounts for a company in accordance with the Companies Act 2006 (CA 2006), there are four sizes of companies to consider. The type of UK company accounts to prepare will depend on the size of the company. Their four sizes and their respective conditions which companies are required to meet to qualify as one of the company sizes are as follows:

Company size Condition 1 Condition 2 Condition 3
Large Does not meet conditions for medium sized company
Medium-sized A turnover of £36 million or less. £18 million or less on its Balance Sheet. 250 employees or less.
Small A turnover of £10.2 million or less. £5.1 million or less on its Balance Sheet. 50 employees or less.
Micro-entity A turnover of £632,000 or less. £316,000 or less on its Balance Sheet. Ten employees or less.
Note, a company will qualify as one of the above sizes if it meets at least two of the conditions.

If a company does not qualify for two of the conditions under company size small, it will require an audit. As part of this, the auditor will include an Auditor’s Report in the full accounts.

Small company and micro accounts -Companies House

Small businesses and micro-entities can use an exemption so that their company annual accounts do not need auditing. As part of their micro-entity accounts, they can also choose whether to send a copy of the Director’s Report and Profit and Loss account to Companies House. Your contractor Balance Sheet can also be more-simple.

Micro-entities can also prepare simpler accounts. Basically, the UK micro-entity accounts just have to meet the statutory minimum requirements. Therefore, micro-entity accounts (UK) only need to send their Balance Sheet to Companies House.

You can also file abridged accounts (if all members agree to it) and many small businesses who file their accounts themselves may choose to do this. Basically, these accounts show less information and exclude net profit from the accounts.

Contractor accounts considerations 

Accounting Reference Date (ARD)

When you set up a company, a more common name for the ARD is the company’s `year-end’. Indeed, this is the date the annual accounts (Companies House) are made up to each year. When a company is set up, the year-end auto-defaults to the last day of the month of the current month in the following year. Therefore, if you set up your company on 22 July 2023, the year-end auto-defaults to 31 July 2024.

In the above example, you may not wish for your year-end to end on 31 July. If this is the case, you or your accountant can file a form online with Companies House to change the year-end date to a different date for your annual contractor accounts.

A limited company contractor will prepare their annual contracting accounts to report its financial activities to the UK authorities. The business will file the UK company accounts with the authorities usually every 12 months. As a general rule, Companies House annual accounts cannot cover a period which is longer than 18 months. Therefore, the latest date you can change your year-end to in this example will be 31 December 2024.

If you wish to change your business year-end, you have to do this before the UK limited company accounts for the current period are due for filing with Companies House. Therefore, you cannot change the year-end after the current filing date.

Contractor accounts -be organised   

A good aim for any small business will be to appoint an accountant from the outset. There are many out there to choose from. However, it is important to look around and choose a good accountant when it comes to preparing company accounts for your business and looking after your affairs in general. Your accountant will look after and file online your Companies House annual report and accounts. This will include the completion of your annual accounts and other tasks. This includes the annual accounts preparation, along with statutory ltd company accounts filing. Most importantly, your accountant will also advise you accordingly throughout the year.

If you like to be organised, there is something else to consider when you have your own company. Basically, you should be aware of the various filing dates for your business. These various dates will include:

  • The filing of official documents such as when you file annual accounts (Companies House) and file company accounts and tax returns (with HMRC).
  • The payment of company and personal taxes.

Examples of the filing dates for your contractor accounts

Let us now look at when do company accounts need to be filed. Basically, when you file your contractor limited company annual accounts with Companies House, the filing deadline is 9 months after the year-end. Therefore, a 31 July 2023 year-end has a due date of 30 April 2024.

When you first register a UK company, the year-end will automatically default to the end of the month during which it was incorporated, in the following year. Therefore, if the business was incorporated on 5 June 2023, the year-end accounts date will default to 30 June 2024. In this case, for the first company year, the limited company accounts (UK) due date will be the earlier of:

  • 9 months after the company year-end.
  • 21 months after the date of incorporation.

Therefore, when you or your accountant file annual accounts (Companies House) for the first time, the deadline may be earlier than usual.

In terms of when you file the Corporation Tax (CT) Return and contractor accounts with HMRC, the due date is 12 months after your company year-end. Therefore, an accounting period for Corporation Tax purposes which ends on 31 July 2023 will have a due date for filing with HMRC of 31 July 2024.

There is also a due date for in respect of when you should pay your CT. The date that it is due is 9 months and one day after your year-end. Therefore, a 31 July 2023 year-end will have a due date to pay the CT by of 1 May 2024.

Other considerations

The official pages in the company’s statutory accounts (UK)

The pages within Companies House financial statements which are a small company’s set of statutory accounts, include various financial information for your business. Therefore, when we look at how to prepare accounts for Companies House, a set of UK company financials will contain:

A signed Director’s Report This is the annual report of the directors, and this will report the company’s activities.
A Profit and Loss (P&L) Account This will show the company’s profit or loss for the financial period.
A signed Balance Sheet Indeed, this will show the balances the business owes and is owed at the financial year-end. The balances will be due by or due to third parties. Therefore, the Balance Sheet displays any balances due to and by the company as of the year-end date.
Notes to the accounts Basically, the notes give further information on the company’s accounting policies. In addition, they also show the breakdown of important items in the Profit and Loss account and Balance Sheet.

Our guide on the P&L account and Balance Sheet show what these pages look like in a small companies’ accounts template. These pages are also extracts from a contractor accounts template or small companies’ accounts template, if you would like to view these.

File your annual contractor accounts with the authorities   

When you file annual accounts (Companies House) these are a shorter version of the full reports. This is because Companies House will only require certain information. The Profit and Loss Account and most of the notes to the accounts are not part of the shorter version. Therefore, many accountants prepare `filleted accounts’ for small companies in respect of these shorter accounts.

When you file UK limited company accounts with Companies House via electronic software, the Companies House authentication code is needed. You will also use this code when you file the Confirmation Statement or any other official change with Companies House.

As we mentioned earlier, Companies House has an option to prepare and file company accounts for a micro entity. By Companies House definition, micro-entities are very small companies. If your company is a micro-entity, you can:

  • Prepare simpler accounts that meet statutory minimum requirements.
  • Send only your balance sheet with less information to Companies House.
  • Benefit from the same exemptions available to small companies.

You can find a micro-entity accounts template here. This page contains sample accounts and an example of a micro-entity Balance Sheet template.

Whether you have a small company or a micro-entity, your company will still have to file the full accounts with HMRC. When we look at how to file micro-entity accounts your accountant can do this or you can do this online via your HMRC Business Tax account.

Besides filing micro-entity accounts or accounts for a small company, your business will also file a company tax return (CT600) each year along with the contractor accounts. The tax return will show the company’s taxable profit and any Corporation Tax due to be paid. Once again, your accountant can do this, or you do this online via your HMRC Business Tax account.

As a business owner, you should also give your company’s shareholders a copy of the accounts.

Companies House -extend year-end or shorten year-end

A company can shorten its year-end as often as it likes, without constraints. On the other hand, it can only extend the accounting period once every five years in normal circumstances. The only exception of which is if it is under administration.

If and when you require, your accountant can make any changes to your company’s year-end for you.

Final thoughts

Due to the complexity, most small businesses will provide the relevant information to their accountants to prepare their company annual accounts. The business owner can then have peace of mind that any reporting requirements are taken care of. Their accountant can then prepare and file the company annual accounts with Companies House and HMRC. The accountant will also file the company tax return and year-end accounts with HMRC on their behalf. Finally, your accountant will also ensure that your company will meet any filing dates and deadlines in respect of your contractor accounts and any other reporting requirements.

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