The Companies Act sets out the definition of ‘small’ and ‘medium’ when they are applied to companies. The factors to take account of are the level of annual turnover, the average of number of employees and the balance sheet total. The balance sheet total means the total of the fixed and current assets.
Small and medium sized companies are entitled to send less detailed accounts to their shareholders and also allow filing abbreviated accounts to Companies House for public inspections. Abbreviated accounts put less information for public record.
Generally, a company will not be entitled to qualify as small or medium sized company if it is:
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a listed public company,
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a banking company or an insurance company,
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an authorized person under the Financial Services Act 1986,
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a member of an ineligible group or
An ineligible group is any group where one of its members is:
- a public company,
- a body corporate incorporated outside Great Britain that has the ability under its constitution to offer its shares or debentures to the public
- an authorized institution under the Banking Act 1987
- an insurance company to which Part II of the Insurance Companies Act 1982 applies
- An authorized person under the Financial Services Act 1986
In addition to the above, under the Companies Act 2006, the company must satisfy at least two of the following criteria for the current and previous accounting periods.
|
Small Company
|
Medium sized Company
|
Audit Exemption
|
| Sales less than |
£6.5 million |
£25.9 million |
£6.5 million |
|
Balance sheet total
|
£3.26 million
|
£12.9 million
|
£3.26 million
|
|
Average number of employees
|
50
|
250
|
-
|
Canterbury Accountancy - providing useful information to UK businesses trading using limited company.
