FRS 105 Micro Entity Accounts in Moreton-in-Marsh

FRS 105 is the UK financial reporting standard for companies that qualify as micro-entities and choose to apply the micro-entities regime. It is a deliberately simplified framework: assets and liabilities are generally measured at historic cost, revaluation and fair value measurement are not permitted, deferred tax is not recognised, and only a small number of prescribed disclosures are required. In practice, an FRS 105 balance sheet plus the required notes and statements is a much shorter document than accounts prepared under FRS 102.

FRS 105 is intended for companies that both qualify as micro-entities and choose to apply the micro-entities regime. Qualification is based on size conditions, but other rules and exclusions can apply — for example, in relation to certain group structures or particular types of company — so meeting the size criteria does not automatically mean the regime is available. It is also a choice rather than a requirement: a qualifying company may prefer to prepare accounts under FRS 102 if that better suits its circumstances.

No. The micro-entities regime is an available accounting regime, not a mandatory one. A company that qualifies for the regime can choose to apply it, and FRS 105 applies when that choice is made. Many qualifying companies do take that route because it reduces the volume of disclosure and removes some of the more complex measurement options, but a qualifying company that wants to use fair value or revaluation, or that needs a different reporting basis for another reason, would generally look at FRS 102 instead.

For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of the 3 applicable size conditions, subject to the relevant rules and exclusions: 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 two of the three is the usual starting point, but it is not the whole test — additional eligibility rules and exclusions can apply, which is why it is worth reviewing the position each year.

FRS 105 is the micro-entities standard and is the more restrictive of the two. It works on a historic cost basis, does not allow revaluation or fair value accounting, does not recognise deferred tax, and requires very limited disclosures. FRS 102 — including the small entities provisions often used by small companies — offers more accounting policy options, permits certain fair value and revaluation treatments, and requires a fuller set of notes, but it also demands more work and more judgement. Choosing between them is about which framework properly fits your company.

Yes. Accounts prepared under FRS 105 are the company's statutory accounts, so they need to be filed with Companies House in line with the company's filing obligations. It is worth noting that filing requirements for small and micro-entity companies are evolving, including moves towards digital, tagged accounts and the reintroduction of profit and loss information for smaller companies, with implementation planned in stages. Because the detail and timing of these changes can shift, it is sensible to check current Companies House guidance before your next filing.

Yes, they are separate obligations. FRS 105 Micro Entity Accounts are the statutory accounts prepared under the micro-entities accounting framework, while the CT600 is the Corporation Tax Return submitted to HMRC. The accounts and the tax return should tell a consistent story about the company's results, but the CT600 involves tax adjustments and computations that do not form part of the accounts themselves. Filing accounts at Companies House does not satisfy the Corporation Tax filing, and vice versa. A Confirmation Statement is a third, separate filing that confirms the company's registered details.

A newly incorporated company can apply FRS 105 if it qualifies for the micro-entities regime in the period concerned and chooses to use it. First accounting periods can be a bit different from later ones — the period may be longer or shorter than twelve months, and that affects how turnover and employee numbers are assessed — so the first set of accounts is worth reviewing carefully rather than assuming the regime applies by default. Many small companies that start trading quietly do end up using FRS 105 from their first accounts onwards.

Typically the preparer will need your bookkeeping records or accounting software access, bank and credit card statements covering the whole period, sales and purchase records, details of any assets bought or sold, information about loans, hire purchase or lease agreements, the director's loan account position, payroll summaries if you employ staff, and the previous year's accounts if there are any. It also helps to know whether the company is part of any group and whether anything unusual happened in the period, such as a one-off large sale or a change in what the company does.