FRS 105 Micro Entity Accounts in Macmerry

FRS 105 — formally, FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime — is the UK accounting standard that sets out how qualifying micro-entities prepare their statutory financial statements. It is the smallest and simplest of the UK reporting frameworks: accounts are prepared on a historical cost basis, revaluations and fair value accounting are not permitted, deferred tax is not recognised, and the disclosure notes are limited to a short prescribed list. It applies when a company qualifies for the micro-entities regime and chooses to use it, and it covers the balance sheet, the profit and loss account and the required notes. It does not cover tax returns or any other filing obligation, which are dealt with separately.

FRS 105 is available to companies that qualify under the UK micro-entities regime and decide to apply it. It is not restricted by trade or location — a company operating in Macmerry is treated in the same way as one anywhere else in the UK — but it is restricted by size, and by the rules and exclusions that surround the regime, which means some company types and some regulated activities cannot use it at all. Qualifying is also not automatic: a company can be small enough to be a micro-entity and still choose to prepare accounts under FRS 102 instead. Once a framework is adopted it should be applied consistently. If you are unsure where your company stands, the sensible step is to have your figures and circumstances reviewed.

No. The micro-entities regime is an option, not an obligation. A company that qualifies as a micro-entity can choose to apply the regime and prepare FRS 105 Micro Entity Accounts, or it can prepare accounts under FRS 102 — most commonly the small entities regime in Section 1A. There is nothing wrong with staying on FRS 102, and some directors prefer to, for example where they want to use revaluation or fair value, where they need deferred tax recognised, or where lenders or investors would rather see the fuller disclosures. What matters is that the framework chosen suits the company's circumstances and is applied consistently.

For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of 3 applicable 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. Accounting periods beginning before that date are assessed against the thresholds in force at the time. Meeting 2 of the 3 tests does not on its own guarantee eligibility, because additional rules and exclusions apply — certain company types, certain regulated activities and group situations can all affect the position. Because the tests are based on the figures for the period being reported, a growing or shrinking company can move in and out of the regime from one year to the next.

Both are UK accounting standards, but they offer different levels of simplicity and flexibility. FRS 105 is the micro-entities standard: historical cost only, no revaluations, no fair value adjustments, no deferred tax, and a very short set of disclosure notes. FRS 102 is broader — a qualifying small company would typically apply Section 1A, which permits options such as revaluing property, plant and equipment, measuring some items at fair value and recognising deferred tax, in exchange for fuller disclosures. The reported figures will often be similar under the two frameworks, but they are not always identical, and the choice can affect how easily the accounts can be compared with earlier years. Moving between frameworks is possible, but it should be considered carefully rather than done casually.

Yes. Preparing FRS 105 Micro Entity Accounts and filing them with Companies House are normally two steps in the same annual cycle. The accounts for the period generally need to be delivered to Companies House, and the micro-entity framework allows a simplified, reduced-disclosure version of the accounts to be filed. Filing the accounts does not settle the company's tax position, and it is worth checking the current Companies House requirements, deadlines and accepted filing methods each year, as these have been changing. Accounts that are accurate, consistent with the underlying records and delivered properly help keep the company's public record in good order.

Yes — they are entirely separate requirements. FRS 105 Micro Entity Accounts are the statutory financial statements prepared under the UK financial reporting framework and filed at Companies House. A CT600 is the Corporation Tax Return submitted to HMRC, and it is driven by the company's taxable profits, which can differ from the profit shown in the accounts because of items such as depreciation and capital allowances, disallowable expenses, and losses brought forward. HMRC does not sign off or approve accounts, and filing accounts at Companies House does not discharge a Corporation Tax obligation. Both need to be dealt with, and the figures behind them should be reconciled.

Broadly, we need the information that supports what the company earned, owns and owes during the period. That usually means bookkeeping or accounting records, bank and credit card statements covering the full period, sales invoices and purchase invoices or receipts, payroll and employee information, details of any loans, hire purchase or lease agreements, purchase and disposal records for equipment or vehicles, and stock or work-in-progress figures where relevant. The previous year's accounts are useful for comparison, and information about directors' advances or loans to the company matters too, because the standard requires certain disclosures in that area. The more complete and well-organised the records, the more straightforward the preparation process tends to be.