I am preparing a set of accounts for a UK Limited company that acts as a nominee for a party under common control. We would like not to name the company so were looking to move from FRSSE accounts to Abbreviated Accounts. I know FRSSE doesn't have FRS8, but the requirements are very similar....
As I recall Company Act regulates Abbreviated Accounts but all templates seem to state compliance in the notes to the accounts, under accounting convention with the FRSSE. My problem then would be I would still need detail RPT.....
So can you do Abbreviated Accounts not complying with the FRSSE and hence without Related Party Transactions?
Accounting Convention
The accounts have been prepared under the historical cost convention and in accordance with generally accepted accounting principles.
Replies (17)
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What are you talking about?
The FRSSE, with its required disclosure of related parties, simply does not apply to abbreviated accounts as they are not intended to give a true and fair view. The abbreviated accounts under the CA are comprised of the balance sheet from the full accounts (with different statements signed by the director) plus a very few obligatory notes under the CA - usually, only the full accounting policies from the full accounts (including reference to prepared under the FRSSE), a summarised fixed asset note and the share capital note, but nothing required only by the FRSSE.
Of course, you do still need full accounts prepared under the FRSSE for the shareholders, but these are not put on the public record at Companies House.
I am sure you realise that you have to prepare full accounts in any event, regardless of whether your clients choose to prepare abbreviated accounts for filing at Companies House. I take it you mean small company abbreviated accounts.
So your reference to "moving from FRSSE accounts to abbreviated accounts" is not right.
Your full accounts will have to comply with FRSSE and will have to disclose any RPTs.
You seem to be assuming that RPT disclosures must automatically copy through from the full accounts to the small company abbreviated accounts. I am not sure that that is the case, although it may be. There are a great many pieces of information in the full accounts that fall by the wayside for the abbreviated accounts (most notably the profit and loss account) and I thought RPTs was one of them. What makes you think that it is required?
Just goes to show that you shouldn't take any notice of what HMRC say about what should go in your accounts. What do they know?
The legislation I think is here.
http://www.legislation.gov.uk/uksi/2008/409/schedule/4/made?view=plain
That specifies the form and content of abbreviated accounts - and the disclosures required do NOT include RPTs.
Loans to directors
I think the sample abbreviated accounts are somewhat misleading. They have tried to include everything that might possibly come up. Note 8 covers a loan to a director, which must be disclosed under s.413 CA 2006 and therefore applies to the abbreviated accounts. I cannot find any legal requirement for the disclosure in Note 7 of either the ultimate controlling party or of a loan to a child of a director, unless "director" is defined elsewhere as including children of a director.
Are you sure?
Note 8 covers a loan to a director, which must be disclosed under s.413 CA 2006 and therefore applies to the abbreviated accounts.
As a matter of interest, are you sure that s.413 requires disclosure of loans etc. in abbreviated accounts? Reading the section at the end of your link I see no mention of abbreviated accounts.
Absolutely sure!
Because:
my software (IRIS) cannot be prevented from including them in the notes to abbreviated accounts, andmy checklist (Kestrian) says that they must be included.
But I must admit that I couldn't find the relevant reference in either the Companies Act or the SCG(ADR) Regs. 2008. Perhaps, it is because they are specified for disclosure in the individual accounts of a company and in the absence of any specific exclusion, must also be included in the abbreviated accounts.
Transcations with Directors or Related Parties
Transactions with directors need to be disclosed in the Abbreviated Accounts (Advances to and guarantees for directors). Related party transactions do not need to be disclosed.
Both require disclosure in the full accounts.
Thank you
Transactions with directors need to be disclosed in the Abbreviated Accounts (Advances to and guarantees for directors).
Thank you but as a matter of interest can you quote the statutory authority for this?
As Euan said above there is no exclusion of advances and guarantees to directors so they must be included in the abbreviated accounts.
I have had a look and can't find any statutory references for you but my Co's Act checklists and various course notes all confirm that this is the case.
Interesting observation that loans to directors are not explicitly excluded so they must have to be included.
But the relevant statute - http://www.legislation.gov.uk/uksi/2008/409/schedule/4/made?view=plain - works by inclusion not exclusion.
It does not say "Everything included in full accounts must be repeated in abbreviated accounts except for the following express exclusions ..."
It says "The information that must be included in abbreviated accounts is as follows ..."
Am I missing something?
The accounts normally state that they are prepared "in accordance with the requirements of sections 394 and 395 and which otherwise compyl with the requirements of the Companies Act 2006 relating to accounts..." And as Euan stated s413 requires disclosure of advances, credits and guarantees to Directors.
If you look at the CA2006 s410 and 411 expressly state they are for companies not subject to the small companies regime, s413 does not and therefore implies that it must be included in all accounts.
This does not mean a detailed RPT note is required (there is no requirement to disclose loans from directors or dividends to directors in abbreviated accounts) and there is no rquirement to disclose controlling party if the company is not a subsidiary undertaking. So if UK Ltd is a standalone company there is no requirement to disclose that it acts nominee for X.
You could not say that your small company accounts comply with generally accepted accounting principles if they do not comply with the FRSSE!
While I'm in remission from my nervous breakdown aaaaaak at pretending to be an accountant....
The example (sample) CH 'abbreviated accounts' I'm using does include a related party disclosure, though Ive not seen how the CH tool could manage to do this..
Without any prejudice to any requirement for one, of course....