New company size criteria come into force in 2016. For companies with periods commencing on or after 1 January 2016, so effectively for 31 December 2016 year ends, the size limits for small companies increase as follows:
- Turnover – £10.2m (from £6.5m)
- Gross assets – £5.1m (from £3.26m)
- Number of employees – unchanged at 50
The effect of the new limits will be that more companies will be classified as small and perhaps be in a position to take advantage of audit exemption and the reduced small companies accounts disclosures.
A quirk of the interaction between the new UK GAAP, FRS102 and the new size limits is that a company that was medium sized in the year ended 31/12/15 and applying the new FRS102 standard could become small in the year ended 31/12/16. This would mean that in 2016 the company would be able to prepare accounts under the reduced disclosure regime of FRS102.
Practically this would mean that for one year only (2015) the company would have statutory accounts with full disclosures on various items. Comparative figures for 2014 would also need to be given for these disclosures. The following year (2016) the company would be small and so have only a limited number of disclosures in the statutory accounts.
In order to avoid this quirk, early adoption of the new size criteria is being allowed meaning that in 2015, a medium sized company under the old size limits would be able to be classified as small. It would then have the choice of preparing small company FRSEE accounts or early adopt FRS102 reduced disclosure. The benefit of doing this would be to avoid the one off FRS102 full disclosure of certain items in the statutory accounts.
If you would like some advice to see if your company would be affected by the issues mentioned above then please contact Geoffrey Cox or any of the Corporate Services Team.