Abbreviated Accounts without Related Party Transactions

Abbreviated Accounts without Related Party...

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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.

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Euan's picture
By Euan MacLennan
07th Jun 2013 09:32

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.

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By johngroganjga
07th Jun 2013 09:38

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? 

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By lawrence5
07th Jun 2013 10:04

Starting to worry about what I'm on about !

Yes small company Abbreviated Accounts for public filing. Full accounts are prepared and the Corporation Tax will require the full set.

I was looking at templates - such as below. Which states they are prepared in accordance with FRSSE and include RPT.

http://www.hmrc.gov.uk/ct/getting-started/intro/sample-abbr-accs.pdf

Not the most technical accountant (Read: CIMA !) but I remember not having to do many of the notes for Abbreviated Accounts, hence the question.

So I guess the answer is the use of "Abbreviated Accounts" explains why much of the disclosure is not present ?

My standard note

Basis of preparation

The accounts have been prepared in accordance with United Kingdom Generally Accepted Accounting Practices, under the historical cost accounting rules, modified by the revaluation of certain assets, and in accordance with the Financial Reporting Standard for Smaller Entities (effective April 2008 ) (FRSSE).

 

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By johngroganjga
07th Jun 2013 10:32

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.

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Euan's picture
By Euan MacLennan
07th Jun 2013 10:37

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.

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Replying to andy.partridge:
By johngroganjga
07th Jun 2013 14:33

Are you sure?

Euan MacLennan wrote:

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. 

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John Toon
By John Toon
07th Jun 2013 10:44

Beaten to it by Euan - and as usual he is right!

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By lawrence5
07th Jun 2013 10:58

Thanks guys - I'll chose my sources more carefully !

 

\ Bookmarks accountingweb.co.uk, deletes HMRC.gov.uk ;-)

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Euan's picture
By Euan MacLennan
07th Jun 2013 16:15

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.

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By Mallock
12th Jun 2013 12:31

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.

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Replying to mrme89:
By johngroganjga
12th Jun 2013 12:52

Thank you

Mallock wrote:

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?

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By Mallock
12th Jun 2013 13:53

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.

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By johngroganjga
12th Jun 2013 14:04

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?

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By macaulay147
12th Jun 2013 15:12

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!

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By jiatbanus
12th Jun 2013 16:04

Thanks

I'm beginning to recognise the persons who make useable comment.

Gracias.

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By deepin
02nd Jan 2014 22:09

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....

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