This Content Was Last Updated on February 9, 2017 by Jessica Garbett

 

FRS 105 is a simpler reporting regime which is being introduced for a new sub-category of small company: the micro-entity.

Micro-entities will have the greatest choice in reporting, where the choice will determine what is available to other users and different forms of reporting will impact on taxes. The first consideration is eligibility and what information will be published.

The Small Companies Accounting Regulations 2013 as amended by SI 2013/3008 introduced a simpler reporting regime for a new sub-category of small company: the micro-entity. The decision to apply the micro-company provision is for the directors to make, and does not require shareholders’ approval or other formalities. The new micro-entity limits are introduced in section 484A A of Companies Act (CA) 2006 and apply to companies which need to deliver accounts for financial years ending on or after 30 September 2013.

Companies qualifying as micro-entities
FRS 105 may be applied by micro-entities. A company is a micro-entity if it does not exceed at least two of the following three thresholds in relation to a financial year:

  • turnover does not exceed £632,000 (adjusted for periods longer or shorter than 12 months)
  • the balance sheet total does not exceed £316,000
  • the average number of employees does not exceed 10.

The criteria must be met in two consecutive years for a company to qualify as a micro-entity and must be exceeded in two consecutive years for a company to cease to qualify.

Any entity that is excluded from the small companies’ regime may not apply FRS 105. In addition the following types of entity are excluded from being treated as a micro-entity:

a)    LLPs (although this is currently under review)
b)    charitable companies
c)    investment undertakings
d)    financial institutions
e)    subsidiaries that are fully consolidated in group accounts and parent companies that prepare group accounts.

Article from ACCA In Practice

 

Whitefield Tax - Isle of Wight Accountants - IR35 specialists
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