Section 395 | Individual accounts: applicable accounting framework

From legislation.gov.uk

(1)A company's individual accounts may be prepared—

(a)in accordance with section 396 (“Companies Act individual accounts”), or

(b)in accordance with UK-adopted international accounting standards (“IAS individual accounts”).^F1

This is subject to the following provisions of this section and to section 407 (consistency of financial reporting within group).

(2)The individual accounts of a company that is a charity must be Companies Act individual accounts.

(3)After the first financial year in which the directors of a company prepare IAS individual accounts (“the first IAS year”), all subsequent individual accounts of the company must be prepared in accordance with UK-adopted international accounting standards unless there is a relevant change of circumstance. This is subject to subsection (4A).^F2F3

(4)There is a relevant change of circumstance if, at any time during or after the first IAS year—

(a)the company becomes a subsidiary undertaking of another undertaking that does not prepare IAS individual accounts,

(aa)the company ceases to be a subsidiary undertaking,^F4

(b)the company ceases to be a company with securities admitted to trading on a UK regulated market, or^F5

(c)a parent undertaking of the company ceases to be an undertaking with securities admitted to trading on a UK regulated market.^F6

(4A)After a financial year in which the directors of a company prepare IAS individual accounts for the company, the directors may change to preparing Companies Act individual accounts for a reason other than a relevant change of circumstance provided they have not changed to Companies Act individual accounts in the period of five years preceding the first day of that financial year.^F7

(4B)In calculating the five year period for the purpose of subsection (4A), no account should be taken of a change due to a relevant change of circumstance.^F7

(5)If, having changed to preparing Companies Act individual accounts . . . , the directors again prepare IAS individual accounts for the company, subsections (3) and (4) apply again as if the first financial year for which such accounts are again prepared were the first IAS year.^F8

Notes

F1
Words in s. 395(1)(b) substituted (31.12.2020 with effect in relation to financial years beginning on or after IP completion day) by The International Accounting Standards and European Public Limited-Liability Company (Amendment etc.) (EU Exit) Regulations 2019 (S.I. 2019/685), reg. 1(2)(3), Sch. 1 para. 6 (with reg. 1(4)-(8), Sch. 1 para. 64) (as amended by S.I. 2020/335, regs. 1, 3, 4 and S.I. 2020/523, regs. 1(2), 22, 25(b)); 2020 c. 1, Sch. 5 para. 1(1)
F2
Words in s. 395(3) substituted (31.12.2020 with effect in relation to financial years beginning on or after IP completion day) by The International Accounting Standards and European Public Limited-Liability Company (Amendment etc.) (EU Exit) Regulations 2019 (S.I. 2019/685), reg. 1(2)(3), Sch. 1 para. 6 (with reg. 1(4)-(8), Sch. 1 para. 64) (as amended by S.I. 2020/335, regs. 1, 3, 4 and S.I. 2020/523, regs. 1(2), 22, 25(b)); 2020 c. 1, Sch. 5 para. 1(1)
F3
Words in s. 395(3) inserted (1.10.2012 with application in accordance with reg. 2 of the amending S.I.) by The Companies and Limited Liability Partnerships (Accounts and Audit Exemptions and Change of Accounting Framework) Regulations 2012 (S.I. 2012/2301), regs. 1, 12
F4
S. 395(4)(aa) inserted (6.4.2008) by virtue of The Companies Act 2006 (Amendment) (Accounts and Reports) Regulations 2008 (S.I. 2008/393), reg. 9
F5
Words in s. 395(4)(b) substituted (31.12.2020 with effect in relation to financial years beginning on or after IP completion day) by The Accounts and Reports (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/145), regs. 1(2)(b), 2, Sch. 2 para. 7(a) (with reg. 7(2)) (as amended by S.I. 2020/523, regs. 1(2), 10, 11); 2020 c. 1, Sch. 5 para. 1(1)
F6
Words in s. 395(4)(c) substituted (31.12.2020 with effect in relation to financial years beginning on or after IP completion day) by The Accounts and Reports (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/145), regs. 1(2)(b), 2, Sch. 2 para. 7(b) (with reg. 7(2)) (as amended by S.I. 2020/523, regs. 1(2), 10, 11); 2020 c. 1, Sch. 5 para. 1(1)
F7
S. 395(4A)(4B) inserted (1.10.2012 with application in accordance with reg. 2 of the amending S.I.) by The Companies and Limited Liability Partnerships (Accounts and Audit Exemptions and Change of Accounting Framework) Regulations 2012 (S.I. 2012/2301), regs. 1, 13
F8
Words in s. 395(5) omitted (1.10.2012 with application in accordance with reg. 2 of the amending S.I.) by virtue of The Companies and Limited Liability Partnerships (Accounts and Audit Exemptions and Change of Accounting Framework) Regulations 2012 (S.I. 2012/2301), regs. 1, 14