Define: Abridged Accounts

UK Accounting Glossary

Definition: Abridged Accounts


Quick Summary of Abridged Accounts


Abridged accounts are general purpose financial statements intended for both company members and publication.   



What is the dictionary definition of Abridged Accounts?

Dictionary Definition


Under the EU Accounting Directive (2014), Abridged Accounts are a simplified form of annual accounts that in certain circumstances may be filed by an entity qualifying as a small company. The new rules allow certain, detailed types of financial information to be excluded from both a company’s balance sheet (statement of financial position) and the profit and loss account (income statement), but only in the event that’s been unanimously agreed upon by shareholders.

In the UK the new regime applies to the financial period beginning on or after the 1st January 2016.


Advertisement



Full Definition of Abridged Accounts


Abridged accounts are accounts that cover an entire accounting period. However, they do not contain certain detailed financial information. Abridged accounts can be used to present summary data or to support a proposal. If you are a small company in the UK you may also opt to file abridged accounts with Companies House. Abridged accounts may be filed with Companies House if you satisfy 2 of the following criteria:

  • your company’s turnover is not greater than £10.2 million
  • the balance sheet total of your company is not greater than £5.1 million
  • the average number of employees in your company does not exceed 50

Abridged accounts afford a company the opportunity to provide less detailed accounts to Companies House, showing a much simpler profit and loss account and balance sheet. There will be fewer ‘lines’ and so less detail. However, companies are still obligated to show a ‘fair and true’ representation of their accounts. A small company is able to abridge either or both of the balance sheet and profit and loss account. If it is decided to abridge the balance sheet then it will not contain notes of what the main headings (creditors, debtors etc) consist of, however, any movement on each kind of fixed asset will be shown. If they decide to file an abridged profit and loss account it will not show the cost of sales and turnover and will begin at the gross profit instead. However, it should be noted, that to do so permission must be granted by each individual shareholder every year.

In the event that it is decided to file abridged accounts, these will be entered into the public record and disseminated amongst the shareholders in lieu of full accounts.

Abridged accounts must have all of the following in them to qualify with Companies House, or you may face a fine or penalty:

  • An abridged profit and loss account and/or an abridged balance sheet.
  • The director’s printed name and signature on the balance sheet.
  • Unless you are claiming exemption it must contain and auditors’ report.
  • A directors’ report – including the printed name and signature of a secretary or director. You do not need to include a business review or strategic report.
  • Notes on the accounts.
  • A statement signed by the director on the balance that the accounts have been prepared in line with the small companies regime.
  • A statement that all shareholders were in agreement filing abridged accounts.

To file your abridged accounts in the UK you can choose one of the following three options:

  1. Sign-in to the governments WebFiling service and select the abridged accounts type.
  2. Create a government gateway account and then you can use the Companies House-HMRC joint filing service. If you do, you are able to file your tax return at the same time.
  3. If you file regularly, you are able to use third party software.

If you need support or guidance, you can see accounts guidance here.

Please note: as of 2016 you can no longer file abbreviated accounts with Companies House. In terms of for the public record, abbreviated accounts are no longer an acceptable accounting practice after 2016.

 


Advertisement



Examples of Abridged Accounts in a sentence


The notes that have been filed with the balance sheet and submitted as part of the abridged accounts show how much was distributed to the shareholders.


Abridged Accounts FAQ's


What does unaudited abridged accounts mean?

Abridged accounts are accounts that cover a full accounting period however will not display as much information as full accounts. These can be submitted to Companies House and shareholders by small companies in the UK, or they can be used to support a financial or business proposal or to present a summary of the companies financial data. Unaudited abridged accounts are accounts based on the financial data that has not been audited. To submit abridged accounts to Companies House and your shareholders annually your accounts must be audited, unless you have obtained an exemption. However, if you are wanting to submit accounts to support a proposal or present a summary of your companies financial data these accounts can be unaudited, nonetheless, even in this circumstance, you are legally obliged to provide a ‘fair and true’ accounting record.

What are abridged accounts FRS 102?

Recent changes to the way that HMRC and Companies House are accepting company accounts means that companies are o longer allowed to file abbreviated accounts and instead must file abridged accounts. This new provision allows small companies that have applied for FRS (Financial Regulating Standards) 102 to file abridged accounts of either or both of their balance sheet and/or profit and loss account.

What is the difference between abbreviated accounts and full accounts?

Abbreviated accounts are no longer an acceptable accounting method for Companies House in the UK. As of 2016, the new financial regulations state that the same information must be made available for the public record and shareholders alike. To this end, abbreviated accounts have been abolished in the UK.

Abbreviated accounts used to include a balance sheet with a reduced number of notes, and did not include a profit and loss account. Companies House and HMRC no longer accept this when filing your Company Accounts.

Before this, a company would have had to decide whether or not to submit abbreviated accounts or accounts for a micro-entity. Prior to the change, a company was obliged to prepare full accounts for its shareholders however the company record was able to submit abbreviated or micro-entity accounts for the public record. This is no longer the case.

Now small companies have 3 choices, to prepare full, abridged or micro-entity accounts (if they satisfy the criteria). Only a small company or LLP may submit abridged accounts. Abridged accounts are not full accounts, although they cover the full accounting period of the financial year for your company. When preparing abridged accounts they must include a profit and loss account that will begin from gross profit instead of showing the cost of sales and turnover. When submitting abridged accounts you may also submit an abridged balance sheet, where you will not have o provide notes under the usual headings (creditors, debtors etc), however, any movement on a fixed asset will still have to be displayed.

 

 

Do I need to file accounts with Companies House?

You will need to file your tax return with HMRC, and you need to file your Company Accounts with HMRC. If you have a private limited that does not require an auditor, you may be able to file both your Company Accounts and your tax return at together.

How do I file an abridged account with Companies House?

You have 3 options for filing your abridged accounts with Companies House in the UK:

  1. You can use the governments WebFiling service, once on the website just select the abridged accounts type.
  2. Companies House-HMRC joint filing service is also available. First, you need to create a government gateway account and you can file your abridged accounts and your tax return at the same time.
  3. Third-party software is also available for those who file with Companies House regularly.

For further support and guidance, access accounts guidance here.

NB: Companies House no longer accept abbreviated accounts for public record. If you are a small business you can either file micro – entity (if you qualify), abridged or full accounts. This has been the case since 2016.


Cite Term


To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
https://payrollheaven.com/define/abridged-accounts/
Modern Language Association (MLA):
Abridged Accounts. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. September 16, 2019 https://payrollheaven.com/define/abridged-accounts/.
Chicago Manual of Style (CMS):
Abridged Accounts. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/abridged-accounts/ (accessed: September 16, 2019).
American Psychological Association (APA):
Abridged Accounts. PayrollHeaven.com. Retrieved September 16, 2019, from PayrollHeaven.com website: https://payrollheaven.com/define/abridged-accounts/

Definition Sources


Definitions for Abridged Accounts are sourced/syndicated from:


This glossary post was last updated: 27th January 2019.