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small company or not?

small company or not?

company was formed 1 August 2010.

business incorporated 1 December 2010.

accounts prepared to 30 September 2011.

POA is 16 months to 30 Sept 2011.  Trade is 10 months long.

Turnover for 10 months trade is £6m.

Company needs an audit (assets £4m) but is it small ??

i.e. do I gross up the £6m by 12/10 and fail the medium test or does the long POA protect it from the medium sized threshold?

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20th Mar 2012 13:08

Small company

The company's "Financial Year" is the 14 months 1 August 2010 to 30 September 2011.  The maximum turnover limit for a 14 month "financial year" is £7,583,333 (£6.5m x 14/12).  The turnover for that "financial year" is only £6m. Therefore it's small. (S.382 CA 2006). The trading period isn't relevant.

Thanks (1)
20th Mar 2012 13:43

Yes - it is small

The Companies Act is not concerned with the commencement of trading, which I what I assume you mean by "business incorporated" - it is concerned with the statutory financial years of the company.  According to s.382(4) CA 2006:

(4)For a period that is a company's financial year but not in fact a year the maximum figures for turnover must be proportionately adjusted.

So, you time adjust the turnover threshold of £6.5M upwards to cover the 14 months of the accounts.  Your actual turnover of £6M in the 14 month financial "year" is below the threshold.  The company qualifies as small.

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By blok
20th Mar 2012 13:57

.

thanks, 

yes I did mean 14 months.

I had suspected that we were OK but couldn't quite prove it.

 

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