Accounts

In the UK, the accounting framework you use depends on your company’s size and whether it’s part of a group:

• FRS 105: For micro-entities (very small companies).
• FRS 102 (Section 1A): For small companies.
• FRS 102 (full): For medium to large companies.
• IFRS: Required for listed companies and may be used voluntarily by others.

Most small to medium-sized private companies choose FRS 102 due to its simplicity and lighter disclosure requirements compared to IFRS. Tip. Under FRS105 the company accounts disclosures are very minimal. It is great if you don’t want everyone in the general public to know how much you have in the business bank account at the end of the year.

Consolidated accounts combine the financials of a parent company and its subsidiaries into a single set of financial statements, eliminating intercompany transactions and balances.

Under UK company law, a parent company must prepare consolidated accounts unless it qualifies for an exemption (e.g., if the group is small as defined by Companies Act thresholds).

Exemptions include:

• Small group exemption
• Subsidiary of an EU/UK parent that prepares group accounts

Always review whether exemption conditions are met before choosing not to consolidate. Tip. Ensure you have a consistent chart of accounts and standardised accounting policies across all subsidiaries before starting the consolidation process. It will save you time and reduce errors when eliminating intercompany transactions and aligning financial statements.

While both are recognised accounting frameworks, there are key differences:

• FRS 102 is a simplified UK GAAP standard tailored to small and medium-sized businesses.
• IFRS is more detailed and globally standardised, often preferred or required by larger or listed companies.

Key differences include:

• Treatment of financial instruments
• Lease accounting
• Revenue recognition
• Disclosure requirements

IFRS tends to require more complex accounting and detailed disclosures, which can increase compliance costs. Tip. Always check for alignment between local FRS and IFRS standards—while they often overlap, key differences (like in lease accounting, revenue recognition, or deferred tax) can materially impact reported figures and disclosures.

For a limited company, accounts must be filed with Companies House:

• 9 months after the financial year end (for private companies)
• 6 months after year end (for public companies)

Filing late results in automatic penalties, which increase the longer the delay. Filing inaccurate or non-compliant accounts can also lead to penalties and reputational damage. Tip. If you believe that you will be late with the filing, you can request an extension of time from companies house, which should give you an extra three months to get it sorted.

Yes, but changes must follow the correct accounting rules:

• A switch from FRS 102 to IFRS is permitted and often done when preparing for listing or international expansion.
• The transition must be handled carefully using the relevant first-time adoption standard (e.g., IFRS 1).
• Likewise, switching from IFRS to FRS 102 (if permitted) requires restatement of comparative figures and disclosure of transition adjustments.

It’s essential to consider the implications for disclosures, tax reporting, and stakeholder expectations before making a switch.

Tip. If you are switching between the standards make sure you thoroughly check the comparatives and disclosures for changes.