Medium sized groups – consolidated accounts

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Under the 1985 Companies Act, medium sized groups were exempt from preparing consolidated accounts. This exemption has been abolished in the 2006 Companies Act – effective for accounting periods beginning 6 April 2008.

This means that a time consuming consolidation process needs to be undertaken for a new tranche of companies, causing more accountants in the UK to experience the usual problems with goodwill calculations, intra-group trading, translation differences etc.

As a reminder, the size parameters for medium groups were changed to:

Net turnover – £6.5m to £25.9m
Gross turnover – £7.8m to £31.1m
Net balance sheet – £3.26m to £12.9m
Gross balance sheet – £3.9m to £15.5m

Any businesses which have subsidiaries should review this situation – it can be worth restructuring the group to avoid incurring the time and costs involved in the consolidation procedure.

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