Preparing Statutory Accounts
Understand the components of statutory accounts and how to prepare them under UK GAAP for Companies House.
Every UK limited company must prepare statutory accounts (also called annual accounts) at the end of each financial year. These are a formal set of financial statements drawn up under UK GAAP, approved by the directors, sent to shareholders and HMRC, and filed at Companies House for the public record. Getting them right matters: late or incorrect accounts can lead to penalties, a strike-off threat, or questions from lenders and investors who rely on the public file. This guide walks through what statutory accounts contain, which accounting standard applies, and how the preparation and filing process works. For the broader picture, see our year-end and annual accounts hub .
What Statutory Accounts Contain
A full set of statutory accounts is more than a single profit figure. The standard components are:
- A balance sheet showing what the company owned and owed on the last day of the financial year
- A profit and loss account showing income, costs and profit over the year
- Notes to the accounts explaining the figures and the policies behind them
- A directors’ report (not required for the smallest companies)
- An auditor’s report, if the company is large enough to require an audit
Most owner-managed small companies are exempt from audit, so in practice their accounts comprise a balance sheet, a profit and loss account and supporting notes. The exact format follows the rules in the Companies Act and the relevant accounting standard.
Choosing FRS 105 or FRS 102
UK GAAP offers different standards depending on company size. The two that apply to most small businesses are:
- FRS 105 — the standard for micro-entities, with the simplest disclosures and a stripped-back format
- FRS 102 (Section 1A) — the small companies regime, with more detail and judgement
The right choice depends on whether the company qualifies as a micro-entity, which is decided against statutory size thresholds for turnover, balance sheet total and employee numbers. A company must usually meet the test for two consecutive years before moving between regimes. We compare the practical trade-offs in our guide to micro-entity versus small company accounts .
| Feature | FRS 105 (micro-entity) | FRS 102 Section 1A (small) |
|---|---|---|
| Disclosure level | Minimal | Moderate |
| Accounting policy choices | Restricted | Broader |
| Fair value / revaluation | Not permitted | Permitted |
| Notes required | Very few | More extensive |
| Suits | Very small, simple companies | Growing or more complex companies |
FRS 105 is quicker and cheaper to prepare, but its simplicity can understate a company’s position. FRS 102 gives a fuller picture, which can be useful when seeking finance.
The Balance Sheet and Profit and Loss
The balance sheet is a snapshot at the year-end date. It groups fixed assets (equipment, vehicles, intangibles), current assets (stock, debtors, cash), creditors falling due within and after one year, and capital and reserves (share capital and retained profit). By definition, net assets equal the total of capital and reserves.
The profit and loss account covers the whole financial year. It runs from turnover down through cost of sales, gross profit, overheads, operating profit, and finally profit before and after Corporation Tax. Sound bookkeeping throughout the year makes this far easier to assemble accurately, which is why solid accounting principles matter long before year end.
Notes and Directors’ Report
The notes explain and expand on the primary statements. They typically set out the accounting policies used (for example, depreciation methods and revenue recognition), and break down figures such as fixed asset movements, debtors, creditors and any related-party transactions. Under FRS 105 the notes are minimal; under FRS 102 Section 1A they are more substantial.
The directors’ report is a short narrative confirming the directors in office during the year and other required statements. Micro-entities are exempt from preparing one, and small companies are exempt from filing one even where they choose to prepare it internally.
Small and Micro-Entity Exemptions
Smaller companies benefit from a series of reliefs that reduce both the work involved and the information made public:
- Audit exemption for most small companies and micro-entities
- Reduced disclosures in the notes
- No requirement to prepare a strategic report
- The option to file abridged or filleted accounts at Companies House
These exemptions exist to keep compliance proportionate for small businesses. They do not change the company’s underlying tax position — the full figures still go to HMRC as part of the Company Tax Return.
Filleted Accounts
Filleted accounts are the version many small companies file at Companies House. Filleting means leaving out the profit and loss account and the directors’ report from the public filing, so that only the balance sheet and selected notes appear on the public record. This keeps detailed trading information out of the public domain while still meeting filing obligations.
It is important to distinguish the two destinations for a company’s accounts:
- HMRC receives the full accounts with the Company Tax Return
- Companies House can receive the filleted (or abridged) version under the small company rules
We explain the public filing steps in detail in our guide to filing accounts with Companies House .
Approval and Signing
Before accounts can be filed, the board of directors must formally approve them. The balance sheet must be signed by a director on behalf of the board, and it must include a statement confirming that the accounts were prepared under the small companies or micro-entity regime where that applies. For micro-entities, the balance sheet also carries the statement that it shows a true and fair view. Approval should be minuted, and accounts must not be circulated to shareholders or filed until that approval is in place.
Filing Deadlines
Statutory accounts feed several connected deadlines. The exact dates depend on the company’s accounting reference date, but the framework is consistent:
| Obligation | Goes to | Typical deadline |
|---|---|---|
| Annual accounts | Companies House | 9 months after the financial year end |
| Company Tax Return (CT600) and full accounts | HMRC | 12 months after the year end |
| Corporation Tax payment | HMRC | 9 months and one day after the year end |
| First accounts | Companies House | Usually 21 months after incorporation |
Note that the Corporation Tax payment is due before the tax return is filed, so estimating the liability early is wise. Companies House applies automatic, escalating penalties for late accounts even by a single day. Building a routine around these dates keeps the process calm rather than rushed.