The Small Companies and Groups (Accounts and Directors’ Report) Regulations 2008

Made: 19th February 2008

Coming into force: 6th April 2008

The Secretary of State makes the following Regulations in exercise of the powers conferred by sections 396(3), 404(3), 409(1) to (3), 412(1) to (3), 416(4), 444(3)(a) and (b), 677(3)(a), 712(2)(b)(i), 836(1)(b)(i) and 1292(1)(a) and (c) of the Companies Act 2006 .

In accordance with sections 473(3) and 1290 of the Companies Act 2006 a draft of this instrument was laid before Parliament and approved by a resolution of each House of Parliament.

PART 1 — INTRODUCTION

Citation and interpretation

1

• (1) These Regulations may be cited as the Small Companies and Groups (Accounts and Directors' Report) Regulations 2008.

• (2) In these Regulations “the 2006 Act” means the Companies Act 2006.

Commencement and application

2

• (1) These Regulations come into force on 6th April 2008.

• (2) They apply in relation to financial years beginning on or after 6th April 2008.

• (3) They apply to companies which are subject to the small companies regime under Part 15 of the 2006 Act (see section 381 of that Act ).

PART 2 — FORM AND CONTENT OF INDIVIDUAL ACCOUNTS

Companies Act individual accounts

3

• (1) Subject to the following provisions of this regulation and regulation 5A, Companies Act individual accounts under section 396 of the 2006 Act (Companies Act: individual accounts) must comply with the provisions of Schedule 1 to these Regulations as to the form and content of the balance sheet and profit and loss account, and additional information to be provided by way of notes to the accounts.

• (1A) Sections C (alternative accounting rules) and D (fair value accounting) in Part 2 of Schedule 1 to these Regulations do not apply to a company which qualifies as a micro-entity in relation to a financial year (see sections 384A and 384B of the 2006 Act) and whose accounts for that year are prepared in accordance with the exemption permitted by—

• (a) regulation 5A, or

• (b) paragraph 1(1A) of Section A in Part 1 of Schedule 1 to these Regulations.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) Accounts are treated as having complied with any provision of Schedule 1 to these Regulations if they comply instead with the corresponding provision of Schedule 1 to the Large and Medium-Sized Companies and Groups (Accounts and Reports) Regulations 2008 .

Information about related undertakings (Companies Act or IAS individual accounts)

4

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Information about directors' benefits: remuneration (Companies Act or IAS individual accounts)

5

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Accounts for delivery to registrar of companies (Companies Act individual accounts)

6

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PART 3 — DIRECTORS' REPORT

Directors' report

7

The report which the directors of a company are required to prepare under section 415 of the 2006 Act (duty to prepare directors' report) must disclose the matters specified in Schedule 5 to these Regulations.

PART 4 — FORM AND CONTENT OF GROUP ACCOUNTS

Companies Act group accounts

8

• (1) Where the directors of a parent company which—

• (a) is subject to the small companies regime, and

• (b) has prepared Companies Act individual accounts in accordance with regulation 3,

prepare Companies Act group accounts under section 398 of the 2006 Act (option to prepare group accounts), those accounts must comply with the provisions of ...Schedule 6 to these Regulations as to the form and content of the consolidated balance sheet and consolidated profit and loss account, and additional information to be provided by way of notes to the accounts.

• (2) Accounts are treated as having complied with any provision of Part 1 of Schedule 6 if they comply instead with the corresponding provision of Schedule 6 to the Large and Medium-Sized Companies and Groups (Accounts and Reports) Regulations 2008.

Information about directors' benefits: remuneration (Companies Act or IAS group accounts)

9

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Information about related undertakings (Companies Act or IAS group accounts)

10

• (1) Companies Act or IAS group accounts must comply with the provisions of Part 2 of Schedule 6 to these Regulations as to information about related undertakings to be given in notes to the company's accounts.

• (2) Information otherwise required to be given by Part 2 of Schedule 6 need not be disclosed with respect to an undertaking that—

• (a) is established under the law of a country outside the United Kingdom, or

• (b) carries on business outside the United Kingdom,

if the conditions specified in section 409(4) of the 2006 Act are met (see section 409(5) of the 2006 Act for disclosure required where advantage taken of this exemption). This paragraph does not apply in relation to the information required by paragraphs 26 and 35 of Schedule 6 to these Regulations.

Accounts for delivery to registrar of companies (Companies Act group accounts)

11

Companies Act group accounts delivered to the registrar of companies under section 444 of the 2006 Act need not give the information required by—

• (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (b) paragraph 25 of Schedule 6 to these Regulations (shares of company held by subsidiary undertakings).

PART 5 — INTERPRETATION

Definition of “provisions”

12

Schedule 7 to these Regulations defines “provisions” for the purpose of these Regulations and for the purposes of—

• (a) section 677(3)(a) (Companies Act accounts: relevant provisions for purposes of financial assistance) in Part 18 of the 2006 Act,

• (b) section 712(2)(b)(i) (Companies Act accounts: relevant provisions to determine available profits for redemption or purchase by private company out of capital) in that Part, ...

• (c) section 836(1)(b)(i) (Companies Act accounts: relevant provisions for distribution purposes) in Part 23 of that Act , and

• (d) section 841(2)(a) (Companies Act accounts: provisions to be treated as realised losses) in that Part.

General interpretation

13

Schedule 8 to these Regulations contains general definitions for the purposes of these Regulations.

SCHEDULE 1 — COMPANIES ACT INDIVIDUAL ACCOUNTS

PART 1 — GENERAL RULES AND FORMATS

SECTION A — GENERAL RULES

1

• (1) Subject to the following provisions of this Schedule—

• (a) every balance sheet of a company must show the items listed in either of the balance sheet formats in Section B of this Part, and

• (b) every profit and loss account must show the items listed in either of the profit and loss account formats in Section B.

• (1A) But, subject to the following provisions of this Schedule, in relation to a company which qualifies as a micro-entity in relation to a financial year (see sections 384A and 384B of the 2006 Act)—

• (a) the only items which must be shown on the company's balance sheet for that year are those listed in either of the balance sheet formats in Section C of this Part, and

• (b) the only items which must be shown on the company's profit and loss account for that year are those listed in the profit and loss account format in Section C.

• (2) References in this Schedule to the items listed in any of the formats in Section B and Section C are to those items read together with any of the notes following the formats which apply to those items.

• (3) Subject to paragraph 1A The items must be shown in the order and under the headings and sub-headings given in the particular format used, but—

• (a) the notes to the formats may permit alternative positions for any particular items, and

• (b) the heading or sub-heading for any item does not have to be distinguished by any letter or number assigned to that item in the format used.

2

• (1) Where in accordance with paragraph 1(1) a company's balance sheet or profit and loss account for any financial year has been prepared by reference to one of the formats in Section B, the company's directors must use the same format in preparing Companies Act individual accounts for subsequent financial years, unless in their opinion there are special reasons for a change.

• (2) Particulars of any such change must be given in a note to the accounts in which the new format is first used, and the reasons for the change must be explained.

3

• (1) Subject to paragraph 1A any item required to be shown in a company's balance sheet or profit and loss account may be shown in greater detail than required by the particular format used.

• (2) The balance sheet or profit and loss account may include an item representing or covering the amount of any asset or liability, income or expenditure not otherwise covered by any of the items listed in the format used, save that none of the following may be treated as assets in any balance sheet—

• (a) preliminary expenses,

• (b) expenses of, and commission on, any issue of shares or debentures,

• (c) costs of research.

4

• (1) Where the special nature of the company's business requires it, the company's directors must adapt the arrangement, headings and sub-headings otherwise required in respect of items given an Arabic number in the balance sheet or profit and loss account format used.

• (2) The directors may combine items to which Arabic numbers are given in any of the formats set out in Section B if—

• (a) their individual amounts are not material to assessing the state of affairs or profit or loss of the company for the financial year in question, or

• (b) the combination facilitates that assessment.

• (3) Where sub-paragraph (2)(b) applies, the individual amounts of any items which have been combined must be disclosed in a note to the accounts.

5

• (1) Subject to sub-paragraph (2), the directors must not include a heading or sub-heading corresponding to an item in the balance sheet or profit and loss account format used if there is no amount to be shown for that item for the financial year to which the balance sheet or profit and loss account relates.

• (2) Where an amount can be shown for the item in question for the immediately preceding financial year that amount must be shown under the heading or sub-heading required by the format for that item.

6

Every profit and loss account other than one prepared by reference to the format in Section C must show the amount of a company's profit or loss ... before taxation.

7

• (1) For every item shown in the balance sheet or profit and loss account the corresponding amount for the immediately preceding financial year must also be shown.

• (2) Where that corresponding amount is not comparable with the amount to be shown for the item in question in respect of the financial year to which the balance sheet or profit and loss account relates, the former amount may be adjusted, and particulars of the non-comparability and of any adjustment must be disclosed in a note to the accounts.

8

Amounts in respect of items representing assets or income may not be set off against amounts in respect of items representing liabilities or expenditure (as the case may be), or vice versa.

9

The company's directors must, in determining how amounts are presented within items in the profit and loss account and balance sheet, have regard to the substance of the reported transaction or arrangement, in accordance with generally accepted accounting principles or practice.

SECTION B — The required formats for the accounts of companies other than micro-entities