Statutory accounts are the annual accounts the Companies Act 2006 requires the directors to prepare, approve, send to members and file at Companies House, in a prescribed format that gives a true and fair view. Management accounts are internal reports, usually monthly or quarterly, that the directors design for running the business. The first answers to the law, shareholders and HMRC; the second answers to the board, and the two only need to agree at the year end.

What are statutory accounts?

Section 394 of the Companies Act 2006 requires the directors of every company to prepare accounts for each of its financial years, called its individual accounts. A financial year runs to the accounting reference date or a date up to seven days either side of it (section 390). GOV.UK guidance describes these as the company’s “statutory accounts” and says they must include a balance sheet, a profit and loss account, notes, and a directors’ report unless the company is a micro entity, with an auditor’s report where the company is not exempt.

The content is not optional. Section 393 says the directors must not approve accounts unless they are satisfied they give a true and fair view. For a small company the balance sheet and profit and loss account must follow one of the formats in Schedule 1 to the Small Companies and Groups (Accounts and Directors’ Report) Regulations 2008, and the notes are set by the regulations and by the applicable standard, usually FRS 102 Section 1A or FRS 105. Paragraph 7 of that Schedule requires corresponding amounts for the previous year against every item.

What are management accounts?

Management accounts are whatever the directors find useful: a monthly profit and loss against budget, a cash flow forecast, debtor days, gross margin by product, a rolling balance sheet. There is no statutory format, no audit and no filing. They are usually produced from the same ledger as the statutory accounts but with less rigour on year end adjustments such as accruals, stock counts, depreciation and tax.

They are not purely voluntary in spirit, though. Section 386 requires every company to keep accounting records sufficient to disclose with reasonable accuracy, at any time, the financial position of the company at that time. A company that can produce reliable monthly figures is plainly meeting that test; one that discovers its position only when the accountant finishes the year end file may not be. The bookkeeping side is covered in accounting records requirements and month end close for small businesses.

How do purpose and audience differ?

Statutory accounts are a stewardship report to people outside the board. Section 423 requires a copy to go to every member, every debenture holder and everyone entitled to receive notice of general meetings. Section 441 requires the directors to deliver accounts to the registrar, and GOV.UK guidance says statutory accounts also go to HMRC as part of the Company Tax Return. Once filed they are on the public record.

Management accounts look forward. They exist so the directors can price work, manage cash, spot problems and decide whether a dividend is affordable. A lender may also require them under a facility agreement, but that obligation comes from the contract, not from company law.

How do format and content differ?

Feature Statutory accounts Management accounts
Legal basis Companies Act 2006 Part 15 None; internal choice or lender requirement
Format Prescribed formats, notes and accounting standards Any layout; often by department, product or site
Standard True and fair view under FRS 102, FRS 105 or IFRS Whatever policies the board finds helpful
Comparatives Prior year for every item Often budget, last month and year to date
Approval Board approval and a director’s signature on the balance sheet (section 414) None required
Assurance Audit unless exempt (section 475) Usually none
Audience Members, Companies House, HMRC Directors and managers, sometimes the bank

How often is each prepared, and by when?

Statutory accounts are prepared once for each financial year. Section 442 gives a private company nine months, and a public company six months, after the end of the accounting reference period to file them, with different rules for a first period longer than 12 months. Companies House guidance stresses that the deadline is met only when acceptable accounts are delivered, so a rejected set filed close to the deadline can still attract a penalty; see Companies House deadlines and penalties.

Management accounts are as frequent as the business needs. Monthly is common, quarterly is often the minimum a lender will accept, and some businesses look at weekly cash. Speed beats precision: a set produced ten working days after the month end with estimated accruals is more useful than a perfect set produced three months later.

Can management accounts ever be used for a legal purpose?

Yes, most often for dividends. Under section 836, whether a distribution is lawful is judged by reference to the relevant accounts, normally the last annual accounts. Where the last annual accounts would not support the payment, it can be justified by reference to interim accounts. For a private company, section 838(1) requires only that interim accounts enable a reasonable judgment to be made about profits, losses, assets, liabilities, provisions, share capital and reserves. Well prepared management accounts with proper year to date adjustments can meet that test. For a public company, interim accounts must also be properly prepared, signed under section 414 and delivered to the registrar. See relevant accounts for distributions and how to pay dividends legally.

What if management figures are shared outside the company?

Section 435 deals with non statutory accounts. If a company publishes a balance sheet or profit and loss account for a financial year otherwise than as part of its statutory accounts, it must publish with it a statement that these are not the statutory accounts, whether statutory accounts for that year have been delivered to the registrar, and whether the auditor reported on them and in what terms. The auditor’s report itself must not be published with the non statutory version. Breach is an offence by the company and every officer in default. Sending monthly figures privately to the bank is not normally publication, but putting an unaudited annual summary on a website or in a sales pack can be.

What does this look like in practice?

Illustration only. A small company has a 31 March year end. Its management accounts for the twelve months to March show profit of £180,000. When the accountant prepares the statutory accounts, stock is written down by £15,000 after the count, a £10,000 bonus is accrued, depreciation is corrected and the Corporation Tax charge is provided. Statutory profit after tax becomes about £110,000. The directors had treated the higher figure as available for dividends during the year, so the accountant checks that distributable reserves at each payment date were sufficient using the interim figures, before the statutory accounts are approved and filed by 31 December.

What mistakes come up most often?

  • Treating management profit as distributable. Dividends paid on unadjusted monthly figures can turn out unlawful once the year end adjustments go through.
  • Filing management accounts at Companies House. The filed accounts must be the statutory accounts in the prescribed format; see small company accounts filing options.
  • No reconciliation at the year end. The final month’s management accounts should be rolled forward to the statutory figures so the board understands every adjustment.
  • Publishing an annual summary without the section 435 statement.
  • Assuming management accounts satisfy section 386. They help, but the underlying records must still show and explain every transaction.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.