What’s the difference between abridged and filleted accounts?

Every business has to share statutory accounts with their shareholders and HMRC at the end of the financial year. This is to make sure they’re paying the right amount of tax, and also to give a clear view of their financial position. Large businesses also need to share their accounts with Companies House to make their financial information public. But small businesses have been able to get away with sending much less detailed abbreviated accounts – until recently. New rules have now abolished these accounts. So what are the options for small businesses wanting to keep some financial information private? Abridged and filleted accounts appear to be the way forward.

What are abbreviated accounts?

Abbreviated accounts are a type of accounts that have now been abolished. Previously, they allowed small businesses to send only a basic balance sheet to Companies House. With a simple picture of assets and liabilities, they gave a rough snapshot of a business’s net value.

What are abridged accounts?

Abridged accounts are more detailed than abbreviated accounts were, but are still less detailed than full year-end accounts (which include a full balance sheet, profit and loss account, notes about the account and a director’s report).

With abridged accounts, you don’t have to disclose your net profit. That’s because your profit & loss account will start from gross profit, rather than turnover and cost of sales.  You also don’t have to include a breakdown of fixed assets, creditors and debtors on your balance sheet, but it will show movement overall.

Under the new ‘file what you prepare’ model, small businesses need to decide whether to abridge accounts when they are preparing them.

What are filleted accounts?

If you’re a small business, you could opt to file filleted accounts with Companies House. With this stripped back option, you can choose not to send the profit & loss account and/or the director’s report to Companies House, meaning this information won’t be made public. You can do this whether you’ve prepared full or abridged accounts.

As always, you will still need to present a true and fair view of your accounts for your shareholders.

What’s the difference between abridged accounts and filleted accounts?

An abridged account is a way of preparing your profit & loss account and balance sheet without disclosing the full information. A filleted account, on the other hand, is when you choose not to send certain reports to Companies House, including your profit & loss account or director’s report.

What accounts am I required to prepare?

Small businesses can either prepare abridged accounts, or prepare full accounts and then choose to fillet them for Companies House. Under the new regime, you’re a small business if you fall into two of these categories:

• Your turnover is no more than £10.2 million
• Your balance sheet total is no more than £5.1 million
• Your average number of employees is no more than 50

If you’re a very small business, you may be able to file even simpler statutory micro-entity accounts. You fall into the micro-entity category if you meet two of these requirements:

• A turnover of £632,000 or less
• £316,000 or less on your balance sheet
• 10 employees or less

Who is allowed to make the decision on which accounts to file?

If you want to abridge your accounts, you need to get consent from all your shareholders first. Because abridged accounts are less detailed, some shareholders might not like the idea.

Should I use an accountant to prepare and file my accounts with Companies House?

It’s not essential to use an accountant to prepare and file your accounts, but it’s much easier if you do. Gathering all the information is a time-consuming task, and as a company director you probably don’t have the time to dedicate to it. Using an accountant also means you can be confident that you’re meeting all your statutory obligations, which can be a weight off your shoulders. Remember, the cost of an accountant is considered a business expense, so is tax-deductible.