How to File Final Accounts to HMRC and Companies House

Team Nomi

Jul 18, 2024
12 minutes read

Final accounts are an important part of a company’s financial reporting process, providing a comprehensive snapshot of its financial position at the end of an accounting period. But what exactly are they, and why are they important? 

Final accounts, also known as year-end accounts or statutory accounts, are a set of financial statements that businesses must prepare and submit to HM Revenue and Customs (HMRC) and Companies House. These documents include a balance sheet, profit and loss account, and often additional reports depending on the company’s size.

Filing final accounts can feel overwhelming and scary for many business owners and entrepreneurs. However, understanding this process is essential for maintaining compliance with UK tax laws and regulations. 

In this blog, we’ll explore the key aspects of filing final accounts to HMRC, including who needs to file, what documents are required, and how to navigate the filing process. Whether you’re a seasoned business owner or just starting, this guide will help demystify the world of final accounts.

What are Final Accounts?

Final accounts, also known as statutory accounts or year end accounts, are a set of financial statements that provide a comprehensive overview of a company’s financial performance and position at the end of its financial year. But why are they called “final”?

These accounts are termed “final” because they represent the culmination of all financial transactions and activities throughout the accounting period. They offer a definitive picture of the company’s financial health, serving as the basis for tax calculations and regulatory compliance.

Final accounts typically consist of three main components:

1. Balance Sheet: An overview of the company’s assets, liabilities, and equity at the year-end.
2. Profit and Loss Account: A summary of the company’s income, expenses, and resulting profit or loss for the year.
3. Notes to the Accounts: Additional explanations and breakdowns of figures in the financial statements.

For larger companies, final accounts may also include a cash flow statement and a director’s report.

These documents aren’t just for HMRC and Companies House; they’re valuable for business owners, investors, and stakeholders to assess the company’s performance and make informed decisions. Understanding your final accounts can provide crucial insights into your business’s financial strengths and areas for improvement.

Who needs to File Final Accounts?

This is a common question for many business owners and entrepreneurs in the UK. The answer depends on the structure and size of your business.

1. Limited Companies: If you run a limited company, regardless of its size, you must file final accounts with both Companies House and HMRC. This requirement applies even if your company is dormant or hasn’t traded during the financial year.
2. Sole Traders and Partnerships: If you’re a sole trader or in a partnership, you don’t need to file final accounts in the same way as limited companies. Instead, you’ll need to submit a self assessment tax return to HMRC, which includes details of your income and expenses.
3. Charities: Registered charities must prepare annual accounts and submit them to the Charity Commission if their income exceeds £25,000.
4. Community Interest Companies (CICs): CICs are required to file annual accounts and a community interest report with Companies House.
5. Limited Liability Partnerships (LLPs): LLPs must file accounts with Companies House, similar to limited companies.
6. Overseas Companies: If you have a UK establishment of an overseas company, you may need to file accounts with Companies House, depending on the disclosure requirements in your home country.

It’s important to note that the complexity and detail required in your final accounts can vary based on your company’s size and turnover. For instance, micro entities and small companies can often file simpler, abridged accounts, while larger companies must provide more comprehensive financial statements.

Failing to file your accounts on time can result in penalties and may affect your company’s reputation. If you’re unsure about your filing requirements, it’s always best to consult with an accountant or financial advisor who can provide guidance tailored to your specific situation.

Components of Final Accounts

When preparing final accounts for HMRC, it’s crucial to understand the key components that make up these financial statements. But what exactly are these components, and what information do they provide? Let’s break down each element to give you a clear picture.

Balance Sheet

The balance sheet is like a financial snapshot of your company at a specific point in time, typically the last day of your accounting period. It answers the question: “What does the company own, and what does it owe?”

Key elements of a balance sheet include:

1. Assets: What the company owns (e.g., cash, inventory, equipment)
2. Liabilities: What the company owes (e.g., loans, accounts payable)
3. Shareholders’ equity: The difference between assets and liabilities

The balance sheet follows a simple equation: Assets = Liabilities + Shareholders’ Equity. This provides a quick overview of your company’s financial health.

Profit and Loss Account

Also known as the income statement, the profit and loss account answers the question: “How much money did the company make or lose over the accounting period?”

This document shows:

1. Revenue: Money earned from sales or services
2. Expenses: Costs incurred in running the business
3. Net profit or loss: The difference between revenue and expenses

The profit and loss account helps you understand your company’s financial performance over time and identify areas for improvement.

Director’s Report

The director’s report provides context to the financial statements and answers the question: “What’s the story behind the numbers?”

This narrative report typically includes:

1. An overview of the company’s performance
2. Significant events during the accounting period
3. Future plans and strategies
4. Any risks or uncertainties facing the business

While not all companies are required to produce a director’s report, it can be a valuable tool for providing additional insight into your business operations.

Notes

The notes to the accounts answer the question: “What additional information is needed to fully understand the financial statements?”

These notes provide detailed explanations and breakdowns of figures in the balance sheet and profit and loss account. They might include:

1. Accounting policies used
2. Breakdowns of significant figures (e.g., types of assets owned)
3. Information about loans, leases, or other financial arrangements
4. Details about employees, including directors’ remuneration

The notes are crucial for ensuring transparency and giving a complete picture of your company’s financial situation.

Understanding these components is essential for accurately preparing and filing your final accounts. Each element provides unique insights into your company’s financial health and performance. By mastering these components, you’ll be better equipped to manage your business finances and meet your reporting obligations to HMRC.

These components form the core of your final accounts, the specific requirements may vary depending on your company’s size and structure. Always consult with a qualified accountant or refer to HMRC guidelines to ensure you’re meeting all necessary reporting requirements.

Filing Requirements for Different Company Sizes

When it comes to filing final accounts, one size doesn’t fit all. The UK government recognises that businesses come in various sizes, and as such, has tailored the filing requirements accordingly. Let’s break down the requirements for micro-entities, small companies, and large companies.

Micro-entities:

What qualifies as a micro-entity?

A company is considered a micro-entity if it meets at least two of these criteria:

• Turnover of £632,000 or less
• £316,000 or less on the balance sheet
• 10 or fewer employees

What do micro-entities need to file?

Micro-entities enjoy the simplest filing requirements. They can submit:

• A simplified balance sheet
• A profit and loss account
• Limited notes to the accounts

These can be filed with minimal disclosures, making the process quicker and easier for the smallest businesses.

Small Companies:

What defines a small company?

A company is classified as small if it meets at least two of these criteria:

• Annual turnover of £10.2 million or less
• £5.1 million or less on the balance sheet
• 50 or fewer employees

What do small companies need to file?

Small companies have slightly more comprehensive requirements:

• Full balance sheet
• Profit and loss account
• Directors’ report
• Notes to the accounts

However, they can still benefit from certain exemptions and may choose to file abridged accounts with less detail.

Large Companies:

What constitutes a large company?

Any company exceeding the small company threshold is considered large.

What do large companies need to file?

• Large companies face the most comprehensive filing requirements:
• Full, detailed balance sheet
• Profit and loss account
• Cash flow statement
• Directors’ report
• Strategic report
• Auditor’s report
• Extensive notes to the accounts

These more detailed accounts provide a comprehensive view of the company’s financial position and performance.

All limited companies must file their accounts with Companies House, and their Corporation Tax return with HMRC. The key is to understand which category your business falls into and prepare your accounts accordingly. This ensures you’re compliant with regulations while not over-complicating your filing process unnecessarily.

Where do you need to file your final accounts?

This is a common question for many business owners, and the answer depends on your company’s structure and obligations. Let’s understand two main destinations: Companies House and HMRC.

Companies House

All limited companies in the UK, regardless of size or trading status, must file their annual accounts with Companies House. This is a legal requirement under the Companies Act 2006. The accounts you submit here are typically abbreviated versions of your full accounts, focusing mainly on the balance sheet and accompanying notes. These accounts become part of the public record, accessible to anyone who wants to look up information about your company.

Key points for Companies House filing:

• You can file online or by post, though online filing is faster and often preferred.
• Micro-entities and small companies can submit simpler accounts.
• The filing deadline is usually 9 months after your company’s financial year end.

HMRC

While all limited companies file with Companies House, not all need to file full accounts with HMRC. You’ll need to submit your full accounts to HMRC as part of your Company Tax Return if your company is:

• Subject to Corporation Tax
• Has received a notice from HMRC to file a Company Tax Return

Key points for HMRC filing:

• Full accounts are required, including detailed profit and loss accounts.
• Filing is typically done online through the HMRC website or approved software.
• The deadline is usually 12 months after the end of your accounting period.

It’s important to note that while the information filed with Companies House and HMRC may overlap, they serve different purposes. Companies House filings are about transparency and public records, while HMRC filings are for tax assessment purposes.

How to File Final Accounts

Preparing and submitting your last financial reports can be easier than you think. With the right approach and tools, you can make an easy process and ensure your company meets its legal obligations. Let’s explore the two main methods for filing final accounts: online filing and using accounting software.

Online Filing Methods

HMRC and Companies House offer online platforms for filing final accounts, making the process more accessible than ever. Here’s how to get started:

1. Register for online services: Visit the HMRC website and create an account if you haven’t already. You’ll need your company’s Unique Taxpayer Reference (UTR) and Company Registration Number (CRN).
2. Prepare your accounts: Ensure all your financial information is accurate and up-to-date.
3. Choose the right form: Select the appropriate form based on your company size (micro-entity, small, or large).
4. Fill in the details: Enter your company’s financial information as required by the form.
5. Submit and pay: Once you’ve completed the form, submit it online and pay any taxes due.

Filing online often comes with extended deadlines compared to paper filing, giving you more time to prepare your accounts.

Using Accounting Software

Accounting software can significantly simplify the process of preparing and filing final accounts. Here’s why it’s worth considering:

1. Automated calculations: Software reduces the risk of human error by automatically performing complex calculations.
2. Real-time updates: Many software solutions update in real-time, ensuring your accounts are always current.
3. Integration with HMRC: Some software can directly file your accounts with HMRC, saving time and reducing errors.
4. Data storage: Digital storage of financial records makes it easier to access historical data and prepare for future filings.

File final accounts with Nomi’s final accounts software. It is designed specifically for accountants and bookkeepers, Nomi offers features that can streamline the final accounts process:

• Automated account production: Nomi can generate final accounts from your trial balance, saving time and reducing errors.
• HMRC-compliant reports: The software ensures your reports meet HMRC standards, reducing the risk of rejection.
• iXBRL tagging: Nomi automatically applies iXBRL tags, a requirement for Corporation Tax filings.
• Cloud-based solution: Access your accounts from anywhere, facilitating collaboration with clients or team members.

By choosing Nomi, you’re not just getting a tool; you’re gaining a partner in your financial reporting process. It streamlines the entire journey from data input to final submission, giving you peace of mind and freeing up your time to focus on what matters most – running your business. With Nomi, filing final accounts transforms from an intimidating challenge into a straightforward and efficient task.

Our software integrates seamlessly with other accounting processes, saving you time and reducing errors. Experience the power of automation and precision in your accounting practice.

To help you make an informed decision, we offer a free trial package. For details Book a demo to explore all the features and see how Nomi can transform your workflow. Try Nomi today and revolutionise your final accounts preparation process.