FRS 105 Micro Entity Accounts in Chatteris

FRS 105 is the UK financial reporting standard that applies to micro-entities. It is a simplified framework covering how qualifying companies recognise, measure and present the items in their annual financial statements when they choose to apply the micro-entities regime. Compared with the standards used by larger companies, it involves considerably fewer disclosure requirements, which is why it is often attractive to very small companies that want straightforward accounts without a lengthy set of notes.

No. The micro-entities regime is an available accounting regime for companies that qualify — it is a choice, not an obligation. A qualifying company could instead prepare its accounts under another framework, such as FRS 102 Section 1A for small entities. What matters is that the framework chosen is one the company is entitled to use and that it is applied consistently and properly. Once a company has decided to apply the micro-entities regime, FRS 105 is the standard that governs how those accounts are prepared.

For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of the following 3 size conditions: turnover of no more than £1 million, a balance sheet total of no more than £500,000, and an average of no more than 10 employees during the period. Meeting the size conditions is not the whole picture, however — other eligibility rules and exclusions can apply, and some companies are excluded from the regime regardless of their size. Because the position can be more nuanced than the headline figures suggest, it is worth checking your specific circumstances before deciding.

Both are UK financial reporting standards, but they are aimed at different sizes of company and differ in how much simplification they allow. FRS 105 is the micro-entity standard and is the more streamlined of the two, with simpler measurement rules and far fewer disclosures. FRS 102 is the standard generally used by small and larger entities, with FRS 102 Section 1A providing a reduced-disclosure version for small companies. FRS 102 permits certain fair value and revaluation treatments that FRS 105 does not, and it requires a broader set of notes. The right choice depends on eligibility, on what the company's accounts need to show, and on who will be reading them.

Yes. Where a company prepares accounts under the micro-entities regime, those accounts are normally delivered to Companies House as the company's annual accounts. Filing the accounts is a separate process from preparing them, and separate again from anything submitted to HMRC. The accounts themselves are prepared under the applicable reporting framework; the delivery obligation is a company law requirement that sits alongside it. It is sensible to keep your filing arrangements and your accounts preparation working to the same timetable so that the figures reported are consistent.

Yes, they are entirely separate. FRS 105 Micro Entity Accounts are the company's financial statements, prepared under the accounting framework. A CT600 is a Corporation Tax Return submitted to HMRC, and it deals with the company's tax position rather than its financial reporting. The two are connected in the sense that the accounts figures usually inform the tax computation, but they are different documents, prepared for different purposes and submitted to different bodies. Keeping clear separation between them helps avoid confusion about what has been filed where.

A newly incorporated company may be able to use FRS 105 if it qualifies for the micro-entities regime and chooses to apply it. In practice, the assessment is made by reference to the company's size in its first accounting period and the applicable conditions, along with any relevant exclusions. A first set of accounts still needs to be prepared properly from the company's records, and if the company is part of a group or has unusual transactions, the position can be less straightforward. It is worth reviewing the company's circumstances before assuming the regime will apply.

For a typical Chatteris-based company, useful records include bank and credit card statements covering the full accounting period, sales invoices and receipts, purchase invoices and expense receipts, payroll or subcontractor information, details of assets bought or sold, loan and finance agreements, stock or work-in-progress figures where relevant, and the previous year's accounts if there are any. The more complete and organised those records are, the more efficiently the accounts can be prepared and the easier it is to resolve queries. If records are incomplete, it is usually still possible to work through the gaps, but it may take a little longer.

Companies House has been introducing reforms that affect how accounts are delivered and what small and micro-entity companies are expected to include when filing. These changes include a move towards accounts being filed using software, and changes to the level of detail filed, such as the inclusion of profit and loss information for small and micro-entity companies. The detail and timing of the reforms have been subject to consultation and phased implementation, so the practical position can shift. It is worth checking the current requirements with Companies House or with your accountant before you file, rather than relying on how things worked in previous years.