Limited Liability Partnerships PART 1 Introduction Citation and interpretation 1 1 These Regulations may be cited as the Limited Liability Partnerships, Partnerships and Groups (Accounts and Audit) Regulations 2016. 2 In these Regulations— “ the Act ” means the Companies Act 2006 ; “the Large and Medium-sized Companies Accounts Regulations ” means the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 ; “the Small Companies Accounts Regulations ” means the Small Companies and Groups (Accounts and Directors’ Report) Regulations 2008 ; “the 2008 Regulations ” means the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008 ; and “ LLP ” means a limited liability partnership registered under the Limited Liability Partnerships Act 2000. Commencement and application 2 1 These Regulations come into force on the seventh day after the day on which they are made. 2 The amendments made by Parts 2 to 4 of these Regulations (other than regulations 26, 46 and 62) have effect in relation to— a financial years beginning on or after 1st January 2016; and b a financial year of an LLP beginning on or after 1st January 2015, but before 1st January 2016, if— i the members of the LLP so decide; and ii a copy of the LLP’s accounts for that financial year has not been delivered to the registrar in accordance with section 444, 445 or 446 of the Act as applied to LLPs by the 2008 Regulations (filing obligations of LLPs subject to small LLPs regime, of medium-sized LLPs and of large LLPs) before the date on which these Regulations come into force. 3 But where— a by virtue of paragraph (2)(b), the amendments made by Parts 2 to 4 of these Regulations have effect in relation to a financial year beginning on or after 1st January 2015, but before 1st January 2016, and b as a result the LLP qualifies as a small LLP in relation to that year, the LLP is not exempt from the requirements of the Act as applied to LLPs by the 2008 Regulations relating to the audit of annual accounts for that year if the LLP would not have been so exempt had the amendments not had effect in relation to that year. 4 In determining whether an LLP or group qualifies as small or medium-sized under section 382(2), 383(3), 465(2) or 466(3) of the Act as applied to LLPs by the 2008 Regulations (qualification in relation to subsequent financial year by reference to circumstances in preceding financial years) in relation to a financial year in relation to which the amendments made by Parts 2 to 4 of these Regulations have effect, the LLP or group is to be treated as having qualified as small or medium-sized (as the case may be) in any previous year in which it would have so qualified if amendments to the same effect as the amendments made by Parts 2 to 4 of these Regulations had had effect in relation to that previous year. 5 Notwithstanding paragraph (2), the members of an LLP cannot take advantage of section 410(2) of the Act as applied to LLPs by the 2008 Regulations (information about related undertakings: alternative compliance) in relation to annual accounts of the LLP approved, pursuant to section 414 of the Act as applied to LLPs by the 2008 Regulations , on or after 1st July 2016. 6 The amendment made by regulation 63 has effect in relation to— a financial years beginning on or after 1st January 2016; and b a financial year of a qualifying partnership (within the meaning given by regulation 3 of the Partnerships (Accounts) Regulations 2008 ) beginning on or after 1st January 2015, but before 1st January 2016, if— i the partners so decide; and ii no copy of the qualifying partnership’s accounts for that financial year has been delivered to the registrar in accordance with regulation 5(1) of those Regulations (delivery of accounts of qualifying partnerships to registrar etc. ) before the date on which these Regulations come into force. 7 The amendment made by regulation 66 has effect in relation to— a financial years beginning on or after 1st January 2016; and b a financial year of a company beginning on or after 1st January 2015, but before 1st January 2016, if— i the directors of the company have decided, pursuant to regulation 2(2)(b) of the Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015 , that the amendments made by those Regulations have effect in relation to that financial year; and ii a copy of the company’s accounts for that financial year has not been delivered to the registrar in accordance with section 445 , 446 or 447 of the Act (filing obligations of medium-sized companies, of unquoted companies and of quoted companies) before the date on which these Regulations come into force. PART 2 Amendments to the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008 Amendments to the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008 3 1 The 2008 Regulations are amended in accordance with this Part. 2 Any reference in this Part to a numbered section is a reference to the section so numbered in the Act as applied to LLPs by the 2008 Regulations. Scheme of Part 15 of the Companies Act 2006 as applied to LLPs 4 1 Regulation 4 (scheme of Part 15 as applied to LLPs) is amended as follows. 2 In section 380 (scheme of Part 15), omit subsections (3) and (4). LLPs subject to the small LLPs regime 5 1 Regulation 5 (LLPs subject to the small LLPs regime) is amended as follows. 2 In section 382 (LLPs qualifying as small: general)— a after subsection (1) insert— 1A Subject to subsection (2), an LLP qualifies as small in relation to a subsequent financial year if the qualifying conditions are met in that year. ; b for subsection (2) substitute— 2 In relation to a subsequent financial year, where on its balance sheet date an LLP meets or ceases to meet the qualifying conditions, that affects its qualification as a small LLP only if it occurs in two consecutive financial years. ; and c in the table in subsection (3)— i in item 1 (turnover), for “Not more than £6.5 million” substitute “Not more than £10.2 million”; and ii in item 2 (balance sheet total), for “Not more than £3.26 million” substitute “Not more than £5.1 million”. 3 In section 383 (LLPs qualifying as small: parent LLPs)— a after subsection (2) insert— 2A Subject to subsection (3), a group qualifies as small in relation to a subsequent financial year of the parent LLP if the qualifying conditions are met in that year. ; b for subsection (3) substitute— 3 In relation to a subsequent financial year of the parent LLP, where on the parent LLP’s balance sheet date the group meets or ceases to meet the qualifying conditions, that affects the group’s qualification as a small group only if it occurs in two consecutive financial years. ; and c in the table in subsection (4)— i in item 1 (aggregate turnover), for “Not more than £6.5 million net (or £7.8 million gross)” substitute “Not more than £10.2 million net (or £12.2 million gross)”; and ii in item 2 (aggregate balance sheet total), for “Not more than £3.26 million net (or £3.9 million gross)” substitute “Not more than £5.1 million net (or £6.1 million gross)”. 4 In section 384 (LLPs excluded from the small LLPs regime)— a in subsection (1)— i omit “is, or”; and ii for paragraph (a) substitute— a a traded LLP, ; and b for subsection (2)(a) substitute— a a traded company, . LLPs qualifying as micro-entities 6 After regulation 5 (LLPs subject to the small LLPs regime), insert the following— LLPs qualifying as micro-entities 5A Sections 384A and 384B apply to LLPs, modified so that they read as follows— 384A LLPs qualifying as micro-entities 384A 1 An LLP qualifies as a micro-entity in relation to its first financial year if the qualifying conditions are met in that year. 2 Subject to subsection (3), an LLP qualifies as a micro-entity in relation to a subsequent financial year if the qualifying conditions are met in that year. 3 In relation to a subsequent financial year, where on its balance sheet date an LLP meets or ceases to meet the qualifying conditions, that affects its qualification as a micro-entity only if it occurs in two consecutive financial years. 4 The qualifying conditions are met by an LLP in a year in which it satisfies two or more of the following requirements— 1. Turnover Not more than £632,000 2. Balance sheet total Not more than £316,000 3. Number of employees Not more than 10 5 For a period that is an LLP’s financial year but not in fact a year the maximum figure for turnover must be proportionately adjusted. 6 The balance sheet total means the aggregate of the amounts shown as assets in the LLP’s balance sheet. 7 The number of employees means the average number of persons employed by the LLP in the year, determined as follows— a find for each month in the financial year the number of persons employed under contracts of service by the LLP in that month (whether throughout the month or not), b add together the monthly totals, and c divide by the number of months in the financial year. 8 In the case of an LLP which is a parent LLP, the LLP qualifies as a micro-entity in relation to a financial year only if— a the LLP qualifies as a micro-entity in relation to that year, as determined by subsections (1) to (7), and b the group headed by the LLP qualifies as a small group, as determined by section 383(2) to (7). LLPs excluded from being treated as micro-entities 384B 1 The micro-entity provisions do not apply in relation to an LLP’s accounts for a particular financial year if the LLP was at any time within that year— a an LLP excluded from the small LLPs regime by virtue of section 384, b an investment undertaking as defined in Article 2(14) of Directive 2013/34/EU of 26 June 2013 on the annual financial statements etc. of certain types of undertakings , c a financial holding undertaking as defined in Article 2(15) of that Directive, d a credit institution as defined in Article 3 of Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms , other than one referred to in Article 2(5) of that Directive, or e an insurance undertaking as defined in Article 2(1) of Council Directive 91/674/EEC of 19 December 1991 on the annual accounts and consolidated accounts of insurance undertakings . 2 The micro-entity provisions also do not apply in relation to an LLP’s accounts for a financial year if— a the LLP is a parent LLP which prepares group accounts for that year as permitted by section 398, or b the LLP is not a parent LLP but its accounts are included in consolidated group accounts for that year. . Annual accounts to give true and fair view 7 1 Regulation 8 (annual accounts to give true and fair view) is amended as follows. 2 In section 393 (accounts to give true and fair view), after subsection (1) insert— 1A Subsection (1B) applies to the members of an LLP which qualifies as a micro-entity in relation to a financial year (see sections 384A and 384B) in their consideration of whether the non-IAS individual accounts of the LLP for that year give a true and fair view as required by subsection (1)(a). 1B Where the accounts contain an item of information additional to the micro-entity minimum accounting items, the members must have regard to any provision of an accounting standard which relates to that item. . Individual accounts 8 1 Regulation 9 (individual accounts) is amended as follows. 2 In section 394A(2)(c) (individual accounts: exemption for dormant subsidiaries), for sub-paragraph (i) substitute— i the provisions of Directive 2013/34/EU of 26 June 2013 on the annual financial statements etc. of certain types of undertakings , or . 3 In section 394B (LLPs excluded from the dormant subsidiaries exemption), before paragraph (a) insert— za a traded LLP, . 4 In section 396 (non-IAS individual accounts)— a before subsection (1) insert— A1 Non-IAS individual accounts must state— a the part of the United Kingdom in which the LLP is registered, b the LLP’s registered number, c the address of the LLP’s registered office, and d where appropriate, the fact that the LLP is being wound up. ; b after subsection (2) insert— 2A In the case of the individual accounts of an LLP which qualifies as a micro-entity in relation to the financial year (see sections 384A and 384B), the micro-entity minimum accounting items included in the LLP’s accounts for the year are presumed to give the true and fair view required by subsection (2). ; and c after subsection (5) insert— 6 Subsections (4) and (5) do not apply in relation to the micro-entity minimum accounting items included in the individual accounts of an LLP for a financial year in relation to which the LLP qualifies as a micro-entity. . 5 For section 397 ( IAS individual accounts) substitute— IAS individual accounts 397 1 IAS individual accounts must state— a the part of the United Kingdom in which the LLP is registered, b the LLP’s registered number, c the address of the LLP’s registered office, and d where appropriate, the fact that the LLP is being wound up. 2 The notes to the accounts must state that the accounts have been prepared in accordance with international accounting standards. . Group accounts 9 1 Regulation 10 (group accounts) is amended as follows. 2 In section 400 (exemption for LLP included in EEA group accounts of larger group)— a for subsection (1)(b) substitute— b where that parent undertaking holds 90% or more of the shares in the LLP and the remaining members have approved the exemption; c where that parent undertaking holds more than 50% (but less than 90%) of the shares in the LLP and notice requesting the preparation of group accounts has not been served on the LLP by the members holding in aggregate at least 5% of the shares in the LLP. Such notice must be served at least six months before the end of the financial year to which it relates. ; b in subsection (2)(b), for sub-paragraph (i) substitute— i in accordance with the provisions of Directive 2013/34/EU of 26 June 2013 on the annual financial statements etc. of certain types of undertakings, or ; c in subsection (2)(c), after “the LLP must disclose in” insert “the notes to”; d in subsection (2)(d), for sub-paragraph (i) substitute— i the address of the undertaking’s registered office (whether in or outside the United Kingdom), or ; e in subsection (3), after “subsection (1)(b)” insert “and (c)”; f in subsection (4), for “any of whose securities are admitted to trading on a regulated market in an EEA state” substitute “which is a traded LLP”; and g omit subsection (5). 3 In section 401( exemption for LLP included in non-EEA group accounts of larger group)— a for subsection (1)(b) substitute— b where that parent undertaking holds 90% or more of the shares in the LLP and the remaining members have approved the exemption; c where that parent undertaking holds more than 50% (but less than 90%) of the shares in the LLP and notice requesting the preparation of group accounts has not been served on the LLP by the members holding in aggregate at least 5% of the shares in the LLP. Such notice must be served at least six months before the end of the financial year to which it relates. ; b for subsection (2)(b) substitute— b those accounts must be drawn up— i in accordance with the provisions of Directive 2013/34/EU of 26 June 2013 on the annual financial statements etc. of certain types of undertakings, ii in a manner equivalent to consolidated accounts so drawn up, iii in accordance with international accounting standards adopted pursuant to the IAS Regulation, or iv in accordance with accounting standards which are equivalent to such international accounting standards, as determined pursuant to Commission Regulation (EC) No. 1569/2007 of 21 December 2007 establishing a mechanism for the determination of equivalence of accounting standards applied by third country issuers of securities pursuant to Directives 2003/71/ EC and 2004/109/EC of the European Parliament and of the Council ; ; c in subsection (2)(e), for sub-paragraph (i) substitute— i the address of the undertaking’s registered office (whether in or outside the United Kingdom), or ; d in subsection (3), after “subsection (1)(b)” insert “and (c)”; e in subsection (4), for “any of whose securities are admitted to trading on a regulated market in an EEA State” substitute “which is a traded LLP”; and f omit subsection (5). 4 In section 404 (non-IAS group accounts), before subsection (1) insert— A1 Non-IAS group accounts must state, in respect of the parent LLP— a the part of the United Kingdom in which the LLP is registered, b the LLP’s registered number, c the address of the LLP’s registered office, and d where appropriate, the fact that the LLP is being wound up. . 5 In section 405 (non-IAS group accounts: subsidiary undertakings included in the consolidation), at the beginning of subsection (3)(b) insert “extremely rare circumstances mean that”. 6 For section 406 (IAS group accounts) substitute— IAS group accounts 406 1 IAS group accounts must state— a the part of the United Kingdom in which the LLP is registered, b the LLP’s registered number, c the address of the LLP’s registered office, and d where appropriate, the fact that the LLP is being wound up. 2 The notes to the accounts must state that the accounts have been prepared in accordance with international accounting standards. . 7 In section 408 (individual profit and loss account where group accounts prepared)— a for subsection (1)(b) substitute— b the LLP’s individual balance sheet shows the LLP’s profit and loss for the financial year determined in accordance with this Act. ; and b omit subsection (2). Information to be given in notes to accounts 10 1 Regulation 11 (information to be given in notes to accounts) is amended as follows. 2 For “Section 409 to 411 apply to LLPs” substitute “Sections 409, 410A and 411 apply to LLPs”. 3 Omit section 410 (information about related undertakings: alternative compliance). 4 In section 410A (information about off-balance sheet arrangements)— a for subsection (1) substitute— 1 If in any financial year— a an LLP is or has been party to arrangements that are not reflected in its balance sheet, and b at the balance sheet date the risks or benefits arising from those arrangements are material, the information required by this section must be given in the notes to the LLP’s annual accounts. ; and b for subsection (4) substitute— 4 If the LLP is subject to the small LLPs regime in relation to the financial year (see section 381), it need not comply with subsection (2)(b). . 5 In section 411 (information about employee numbers and costs)— a for subsection (1) substitute— 1 The notes to an LLP’s annual accounts must disclose the average number of persons employed by the LLP in the financial year. 1A In the case of an LLP not subject to the small LLPs regime, the notes to the LLP’s accounts must also disclose the average number of persons within each category of persons so employed. ; b in subsection (2), for “subsection (1)(b)” substitute “subsection (1A)”; c in subsection (3), for “subsection (1)(a) or (b)” substitute “subsection (1) or (1A)”; d in subsection (4)— i in paragraph (a), for “subsection (1)(a)” substitute “subsection (1)”; and ii in paragraph (b), for “subsection (1)(b)” substitute “subsection (1A)”; and e for subsection (5) substitute— 5 Except in the case of an LLP subject to the small LLPs regime, the notes to the LLP’s annual accounts or the profit and loss account must disclose, with reference to all persons employed by the LLP during the financial year, the total staff costs of the LLP relating to the financial year broken down between— a wages and salaries paid or payable in respect of that year to those persons, b social security costs incurred by the LLP on their behalf, and c other pension costs so incurred. . Approval and signing of accounts 11 1 Regulation 12 (approval and signing of accounts) is amended as follows. 2 In section 414 (approval and signing of accounts), for subsection (3) substitute— 3 If the accounts are prepared in accordance with the small LLPs regime, the balance sheet must contain, in a prominent position above the signature— a in the case of individual accounts prepared in accordance with the micro-entity provisions, a statement to that effect, b in the case of accounts not prepared as mentioned in paragraph (a), a statement to the effect that the accounts have been prepared in accordance with the provisions applicable to LLPs subject to the small LLPs regime. . Duty to file accounts and reports 12 1 Regulation 17 (duty to file accounts and reports) is amended as follows. 2 In section 442 (period allowed for filing accounts)— a in subsection (5), for “If” substitute “Subject to subsection (5A), if”; and b after subsection (5) insert— 5A Any such extension must not have the effect of extending the period for filing to more than twelve months after the end of the relevant accounting reference period. ; 3 In section 444 (filing obligations of LLPs subject to small LLPs regime)— a in subsection (1)(a), for “a balance sheet” substitute “the balance sheet”; b in subsection (2), for “The” substitute “Where the designated members deliver to the registrar a copy of the LLP’s profit and loss account under subsection (1)(b), the”; c after subsection (2) insert— 2A Where the balance sheet or profit and loss account is abridged pursuant to paragraph 1A of Schedule 1 to the Small Limited Liability Partnerships (Accounts) Regulations 2008 ( S.I. 2008/1912 ) , the designated members must also deliver to the registrar a statement by the LLP that all the members of the LLP have consented to the abridgement. ; d in subsection (3), omit from “, except that where” to the end of that subsection; e omit subsection (4); f in subsection (5), omit “deliver to the registrar IAS accounts, or non-IAS accounts that are not abbreviated accounts, and in accordance with this section”; and g after subsection (5) insert— 5A Subject to subsection (5C), where the designated members of an LLP subject to the small LLPs regime do not deliver to the registrar a copy of the LLP’s profit and loss account— a the copy of the balance sheet delivered to the registrar must disclose that fact, and b unless the LLP is exempt from audit and the members have taken advantage of that exemption, the notes to the balance sheet delivered must satisfy the requirements in subsection (5B). 5B Those requirements are that the notes to the balance sheet must— a state whether the auditor’s report was qualified or unqualified, b where that report was qualified, disclose the basis of the qualification (reproducing any statement under section 498(2)(a) or (b) or (3), if applicable), c where that report was unqualified, include a reference to any matters to which the auditor drew attention by way of emphasis, and d state— i the name of the auditor and (where the auditor is a firm) the name of the person who signed the auditor’s report as senior statutory auditor, or ii if the conditions in section 506 (circumstances in which names may be omitted) are met, that a determination has been made and notified to the Secretary of State in accordance with that section. 5C Subsection (5A) does not apply in relation to an LLP if— a the LLP qualifies as a micro-entity (see sections 384A and 384B) in relation to a financial year, and b the LLP’s accounts are prepared for that year in accordance with any of the micro-entity provisions. . Filing obligations of medium-sized LLPs 13 1 Regulation 18 (filing obligations of medium-sized LLPs) is amended as follows. 2 In section 445 (filing obligations of medium-sized LLPs)— a at the end of subsection (2) insert— This does not apply if the LLP is exempt from audit and the members have taken advantage of that exemption. ; and b omit subsections (3) and (4). Filing obligations of large LLPs 14 1 Regulation 19 (filing obligations of large LLPs) is amended as follows. 2 In section 446 (filing obligations of large LLPs), at the end of subsection (2) insert— This does not apply if the LLP is exempt from audit and the members have taken advantage of that exemption. . Exemption for dormant subsidiary LLPs 15 1 Regulation 19A (exemption for dormant subsidiary LLPs) is amended as follows. 2 In section 448A (dormant subsidiary LLPs exempt from obligation to file accounts), for subsection (2)(c)(i) substitute— i the provisions of Directive 2013/34/EU of 26 June 2013 on the annual financial statements etc. of certain types of undertakings , or . 3 In section 448B (LLPs excluded from the dormant subsidiaries exemption), before paragraph (a) insert— za a traded LLP, . Removal of requirements relating to abbreviated accounts 16 1 Omit regulation 20 (requirements where abbreviated accounts delivered). 2 Omit regulation 21 (approval and signing of abbreviated accounts). Medium-sized LLPs 17 1 Regulation 26 (medium-sized LLPs) is amended as follows. 2 In the table in section 465(3) (LLPs qualifying as medium-sized: general)— a in item 1 (turnover), for “Not more than £25.9 million” substitute “Not more than £36 million”; and b in item 2 (balance sheet total), for “Not more than £12.9 million” substitute “Not more than £18 million”. 3 In the table in section 466(4) (LLPs qualifying as medium-sized: parent LLPs)— a in item 1 (aggregate turnover), for “Not more than £25.9 million net (or £31.1 million gross)” substitute “Not more than £36 million net (or £43.2 million gross)”; and b in item 2 (aggregate balance sheet total), for “Not more than £12.9 million net (or £15.5 million gross)” substitute “Not more than £18 million net (or £21.6 million gross)”. 4 In section 467 (LLPs excluded from being treated as medium-sized)— a for subsection (1)(a) substitute— a a traded LLP, ; and b for subsection (2)(a) substitute— a a traded company, . Preparation and filing of accounts in euros 18 1 Regulation 28 (other supplementary provisions) is amended as follows. 2 In section 469 (preparation and filing of accounts in euros), after subsection (3) insert— 3A Subsection (3)(b) does not apply to the non-IAS individual accounts of an LLP for a financial year in which the LLP qualifies as a micro-entity (see sections 384A and 384B). . Meaning of “annual accounts” 19 1 Regulation 29 (meaning of “annual accounts”) is amended as follows. 2 In section 471(1) (meaning of “annual accounts” and related expressions), for “given in group accounts” substitute “given in notes to the individual balance sheet”. Notes to the accounts 20 1 Regulation 30 (notes to the accounts) is amended as follows. 2 In section 472 (notes to the accounts)— a omit subsection (1); and b before subsection (2) insert— 1A In the case of an LLP which qualifies as a micro-entity in relation to a financial year (see sections 384A and 384B), the notes to the accounts for that year required by regulation 5A of, and paragraph 55 of Part 3 of Schedule 1 to, the Small Limited Liability Partnerships (Accounts) Regulations 2008 ( S.I. 2008/1912 ) must be included at the foot of the balance sheet. . Minor definitions 21 1 Regulation 32 (minor definitions) is amended as follows. 2 In section 474(1) (minor definitions)— a insert the following definitions at the appropriate places— “micro-entity minimum accounting item” means an item of information required by this Part or by the Small Limited Liability Partnerships (Accounts) Regulations 2008 ( S.I. 2008/1912 ) to be contained in the non-IAS individual accounts of an LLP for a financial year in relation to which it qualifies as a micro-entity (see sections 384A and 384B); ; “micro-entity provisions” means any provisions of this Part, Part 16 or the Small Limited Liability Partnerships (Accounts) Regulations 2008 ( S.I. 2008/1912 ) relating specifically to the individual accounts of an LLP which qualifies as a micro-entity; ; “qualified”, in relation to an auditor’s report, means that the report does not state the auditor’s unqualified opinion that the accounts have been properly prepared in accordance with this Act; ; “traded company” means a company any of whose transferable securities are admitted to trading on a regulated market; ; “traded LLP” means an LLP any of whose transferable securities are admitted to trading on a regulated market; ; and b in the definition of “turnover”, omit “falling within the LLP’s ordinary activities”. Exemption from audit: qualifying subsidiaries 22 1 Regulation 34A (exemption from audit: qualifying subsidiaries) is amended as follows. 2 In section 479A(2)(c) (subsidiary LLPs: conditions for exemption from audit), for sub-paragraph (i) substitute— i the provisions of Directive 2013/34/EU of 26 June 2013 on the annual financial statements etc. of certain types of undertakings, or . 3 In section 479B (LLPs excluded from the subsidiary audit exemption), before paragraph (a) insert— za a traded LLP as defined in section 474(1), . Exemption from audit: dormant LLPs 23 1 Regulation 35 (exemption from audit: dormant LLPs) is amended as follows. 2 In section 481 (LLPs excluded from dormant LLPs exemption), before paragraph (a) insert— za is a traded LLP as defined in section 474(1), . Auditor’s report 24 1 Regulation 39 (auditor’s report) is amended as follows. 2 In section 495 (auditor’s report on LLP’s annual accounts)— a in the last sentence of subsection (3)— i after “this subsection” insert “or subsection (3A)”; and ii for “section 474” substitute “sections 464, 471 and 474”; and b after subsection (3) insert— 3A Subsection (3B) applies to the auditors of an LLP which qualifies as a micro-entity in relation to a financial year (see sections 384A and 384B) in their consideration of whether the non-IAS individual accounts of the LLP for that year give a true and fair view as mentioned in subsection (3)(a). 3B Where the accounts contain an item of information additional to the micro-entity minimum accounting items, the auditors must have regard to any provision of an accounting standard which relates to that item. . Minor definitions 25 1 Regulation 55 (minor definitions) is amended as follows. 2 In section 1173(1) (minor definitions: general), after the definition of “regulated market”, insert— “transferable securities” means anything which is a transferable security for the purposes of Directive 2004/39/EC of the European Parliament and of the Council on markets in financial instruments . Review 26 After regulation 58 (revocation and transitional provisions) insert— Review 59 1 The Secretary of State must from time to time— a carry out a review of the provisions of these Regulations to which amendments have been made by Part 2 of the Limited Liability Partnerships, Partnerships and Groups (Accounts and Audit) Regulations 2016 (“the 2016 Regulations ”), b set out the conclusions of the review in a report, and c publish the report. 2 The report must, in particular— a set out the objectives intended to be achieved by those provisions, b assess the extent to which those objectives are achieved, c assess whether those objectives remain appropriate, and d if those objectives remain appropriate, assess the extent to which they could be achieved in another way which involves less onerous regulatory provision. 3 The first report under this regulation must be published before the end of the period of 5 years beginning with the date on which the 2016 Regulations come into force. 4 Subsequent reports under this regulation must be published at intervals not exceeding 5 years. 5 In this regulation, “regulatory provision” has the meaning given by section 32(4) of the Small Business, Enterprise and Employment Act 2015 . . PART 3 Amendments to the Small Limited Liability Partnerships (Accounts) Regulations 2008 Amendments to the Small Limited Liability Partnerships (Accounts) Regulations 2008 27 The Small Limited Liability Partnerships (Accounts) Regulations 2008 are amended in accordance with this Part. Amendments to Part 1 (introduction) 28 In regulation 1(2) (interpretation), for the definition of “LLP” substitute— “LLP” means a limited liability partnership registered under the Limited Liability Partnerships Act 2000 ; . Amendments to Part 2 (form and content of individual accounts) 29 In regulation 3(1) (non-IAS individual accounts), in the modified regulation 3 of the Small Companies Accounts Regulations which is applied to LLPs— a at the beginning of paragraph (1) insert “Subject to the following provisions of this regulation and regulation 5A,”; b after paragraph (1) insert— 1A Sections C (alternative accounting rules) and D (fair value accounting) in Part 2 of Schedule 1 to these Regulations do not apply to an LLP which qualifies as a micro-entity in relation to a financial year (see sections 384A and 384B of the 2006 Act ) and whose accounts for that year are prepared in accordance with the exemption permitted by— a regulation 5A, or b paragraph 1(1A) of Section A in Part 1 of Schedule 1 to these Regulations. ; and c omit paragraph (2). 30 Omit regulation 4 (information about related undertakings (non-IAS or IAS individual accounts)). 31 Omit regulation 5 (accounts for delivery to registrar of companies (non-IAS individual accounts)). 32 At the end of Part 2 insert— Non-IAS individual accounts: micro-entities – notes to the accounts 5A Regulation 5A of the Small Companies Accounts Regulations applies to LLPs, modified so that it reads as follows— Non-IAS individual accounts: micro-entities – notes to the accounts 5A Nothing in Schedule 1 to these Regulations requires the non-IAS individual accounts of an LLP for a financial year in which the LLP qualifies as a micro-entity (see sections 384A and 384B of the 2006 Act) to contain any information by way of notes to the accounts, except that the LLP is required to disclose by way of notes to the accounts the information required by paragraph 55 in Part 3 of Schedule 1. . Amendments to Part 3 (form and content of group accounts) 33 In regulation 6 (non-IAS group accounts), in the modified form of regulation 8 of the Small Companies Accounts Regulations which is applied to LLPs, omit both occurrences of “Part 1 of”. Amendments to Section A of Part 1 of Schedule 1 (general rules and formats for balance sheets and profit and loss accounts: non-IAS individual accounts) 34 In Section A of Part 1 of Schedule 1 (general rules and formats for balance sheets and profit and loss accounts: non-IAS individual accounts)— a in paragraph 1 (general requirements for format of balance sheets and profit and loss accounts)— i after sub-paragraph (1) insert— 1A But, subject to the following provisions of this Schedule, in relation to an LLP which qualifies as a micro-entity in relation to a financial year (see sections 384A and 384B of the 2006 Act)— a the only items which must be shown on the LLP’s balance sheet for that year are those listed in either of the balance sheet formats in Section C of this Part, and b the only items which must be shown on the LLP’s profit and loss account for that year are those listed in the profit and loss account format in Section C. ; ii in sub-paragraph (2), after “Section B” insert “and Section C”; and iii at the beginning of sub-paragraph (3) insert “Subject to paragraph 1A, ”; b after paragraph 1 insert— 1A 1 Where appropriate to the circumstances of an LLP’s business, the members of the LLP may, with reference to one of the formats in Section B, draw up an abridged balance sheet showing only those items in that format preceded by letters and roman numerals, provided that— a in the case of format 1, note (3) of the notes to the formats is complied with, b in the case of format 2, notes (3) and (8) of those notes are complied with, c all of the members of the LLP have consented to the drawing up of the abridged balance sheet. 2 Where appropriate to the circumstances of an LLP’s business, the members of the LLP may, with reference to one of the formats in Section B, draw up an abridged profit and loss account, combining under one item called “Gross profit or loss”— a items 1, 2, 3 and 6 in the case of format 1, and b items 1 to 5 in the case of format 2, provided that, in either case, all of the members of the LLP have consented to the drawing up of the abridged profit and loss account. 3 Such consent as is referred to in sub-paragraphs (1) and (2) may only be given as regards the preparation of, as appropriate, the balance sheet or profit and loss account in respect of the preceding financial year. 1B 1 The members of the LLP may adapt one of the balance sheet formats in Section B so to distinguish between current and non-current items in a different way, provided that— a the information given is at least equivalent to that which would have been required by the use of such format had it not been thus adapted, and b the presentation of those items is in accordance with generally accepted accounting principles or practice. 2 The members of the LLP may, otherwise than pursuant to paragraph 1A(2), adapt one of the profit and loss account formats in Section B, provided that— a the information given is at least equivalent to that which would have been required by the use of such format had it not been thus adapted, and b the presentation is in accordance with generally accepted accounting principles or practice. 1C So far as is practicable, the following provisions of this Section apply to the balance sheet or profit and loss account of an LLP notwithstanding any such abridgment or adaptation pursuant to paragraph 1A or 1B. ; c in paragraph 2 (general requirement for continuous use of formats for balance sheets and profit and loss accounts), for “paragraph 1” substitute “paragraph 1(1)”; d after paragraph 2 insert— 2A Where in accordance with paragraph 1(1A) an LLP’s balance sheet or profit and loss account for any financial year has been prepared by reference to one of the formats in Section C, the members of the LLP must use the same format in preparing non-IAS individual accounts for subsequent financial years, unless in their opinion there are special reasons for a change. ; e in paragraph 6 (profit and loss account must show amount of profit and loss before taxation)— i after “profit and loss account” insert “other than one prepared by reference to the format in Section C”; and ii omit “on ordinary activities”; and f after paragraph 9 (requirement to have regard to the substance of a reported transaction or arrangement) insert— 9A Where an asset or liability relates to more than one item in the balance sheet, the relationship of such asset or liability to the relevant items must be disclosed either under those items or in the notes to the accounts. . Amendments to Section B of Part 1 of Schedule 1 (required formats for accounts: non-IAS individual accounts of small LLPs other than micro-entities) 35 In Section B of Part 1 of Schedule 1 (required formats for balance sheets: non-IAS individual accounts)— a for the heading “ THE REQUIRED FORMATS FOR ACCOUNTS ”, substitute “ THE REQUIRED FORMATS FOR THE ACCOUNTS OF LLPS OTHER THAN MICRO-ENTITIES ”; b in balance sheet Format 2, for the heading “LIABILITIES”, substitute “CAPITAL, RESERVES AND LIABILITIES”; c in notes on the balance sheet formats— i in note (3), for “unless the aggregate amount of debtors falling due after more than one year is disclosed in the notes to the accounts”, substitute “and, in the case of format 2, the aggregate amount falling due after more than one year must also be shown”; and ii in note (8), omit from “unless the aggregate amount” to the end; d in profit and loss account Format 1— i in item 12, for “charges” substitute “expenses”; ii in items 13 and 14, omit “on ordinary activities”; and iii omit items 15 to 18; e in profit and loss account Format 2— i for item 7(b) substitute— b Amounts written off current assets, to the extent that they exceed write-offs which are normal in the undertaking concerned ; ii in items 8 and 14, for “charges” substitute “expenses”; iii in items 15 and 16, omit “on ordinary activities”; and iv omit items 17 to 20; and f in notes on the profit and loss account formats— i in the title to note (11), for “charges” substitute “expenses”; and ii omit note (12). Insertion of Section C into Part 1 of Schedule 1 (required formats for accounts: non-IAS individual accounts of LLPs which are micro-entities) 36 After Section B of Part 1 of Schedule 1 (required formats for accounts: non-IAS individual accounts of LLPs which are micro-entities) insert— SECTION C THE REQUIRED FORMATS FOR THE ACCOUNTS OF MICRO-ENTITIES Balance Sheet Formats Format 1 A Fixed assets B Current assets C Prepayments and accrued income D Creditors: amounts falling due within one year E Net current assets (liabilities) F Total assets less current liabilities G Creditors: amounts falling due after more than one year H Provisions for liabilities I Accruals and deferred income J Loans and other debts due to members K Members’ other interests Format 2 ASSETS A Fixed assets B Current Assets C Prepayments and accrued income CAPITAL, RESERVES AND LIABILITIES A Loans and other debts due to members B Members’ other interests C Provisions for liabilities D Creditors (1) E Accruals and deferred income Notes on the balance sheet formats (1) Creditors (Format 2, item D under Capital, Reserves and Liabilities) Aggregate amounts falling due within one year and after one year must be shown separately. Profit and loss account format A Turnover B Other income C Cost of raw materials and consumables D Staff costs E Depreciation and other amounts written off assets F Other charges G Tax H Profit or loss for the financial year before members’ remuneration and profit shares . Amendments to Section A of Part 2 of Schedule 1 (accounting principles: non-IAS individual accounts) 37 In Section A of Part 2 of Schedule 1 (accounting principles: non-IAS individual accounts)— a in paragraph 12 (consistent application of accounting policies), after “Accounting policies” insert “and measurement bases”; b in paragraph 13 (determination of amount of an item on a prudent basis)— i omit “and” at the end of sub-paragraph (a); and ii after sub-paragraph (b) insert— c all provisions for diminution of value must be recognised, whether the result of the financial year is a profit or a loss, d at the balance sheet date, a provision must represent the best estimate of the expenses likely to be incurred or, in the case of a liability, of the amount required to meet that liability, and e provisions must not be used to adjust the values of assets. ; and c after paragraph 15 (individual assets or liabilities must be determined separately in determining aggregate amount) insert— 15A The opening balance sheet for each financial year must correspond to the closing balance sheet for the preceding financial year. . Amendments to Section B of Part 2 of Schedule 1 (historical cost accounting rules: non-IAS individual accounts) 38 In Section B of Part 2 of Schedule 1 (historical cost accounting rules: non-IAS individual accounts)— a in paragraph 19 (provision for diminution in value of a fixed asset)— i in sub-paragraph (1), after “set out in” insert “Section B of”; and ii for sub-paragraph (3) substitute— 3 Provisions made under sub-paragraph (1) or (2) must be charged to the profit and loss account and disclosed separately in a note to the accounts if not shown separately in the profit and loss account. ; b in paragraph 20 (cessation of reasons for inclusion of provision about diminution in value)— i after sub-paragraph (1) insert— 1A But provision made in accordance with paragraph 19(2) in respect of goodwill must not be written back to any extent. ; and ii for sub-paragraph (2) substitute— 2 Any amounts written back under sub-paragraph (1) must be recognised in the profit and loss account and disclosed separately in a note to the accounts if not shown separately in the profit and loss account. ; c for paragraphs 21 (development costs) and 22 (goodwill) substitute— Intangible Assets 21 1 Where this is in accordance with generally accepted accounting principles or practice, development costs may be included in “other intangible assets” under “fixed assets” in the balance sheet formats set out in Section B of Part 1 of this Schedule. 2 If any amount is included in an LLP’s balance sheet in respect of development costs, the note on accounting policies (see paragraph 44 of this Schedule) must include the following information— a the period over which the amount of those costs originally capitalised is being or is to be written off, and b the reasons for capitalising the development costs in question. 22 1 Intangible assets must be written off over the useful economic life of the intangible asset. 2 Where in exceptional cases the useful life of intangible assets cannot be reliably estimated, such assets must be written off over a period chosen by the members of the LLP. 3 The period referred to in sub-paragraph (2) must not exceed ten years. 4 There must be disclosed in a note to the accounts the period referred to in sub-paragraph (2) and the reasons for choosing that period. ; d for paragraph 26(1) (assets included at a fixed amount) substitute— 1 Subject to sub-paragraph (2), the following may be included at a fixed quantity and value in the balance sheet formats set out in Section B of Part 1 of this Schedule— a assets which fall to be included amongst the fixed assets of an LLP under the item “intangible assets”, and b raw materials and consumables within the item “stocks”. ; e at the end of paragraph 27(1) (determination of purchase price of an asset) insert “and then subtracting any incidental reductions in the cost of acquisition”; f in paragraph 28 (determination of purchase price or production cost of stocks and fungible assets)— i in sub-paragraph (1)(a), after “assets which” insert “, by virtue of regulation 3(1) and Section B of Part 1 of this Schedule,”; and ii in sub-paragraph (2)(d), for “similar to any of the methods mentioned above” substitute “reflecting generally accepted best practice”; and g after paragraph 29 (substitution of original stated amount where price or cost unknown) insert— Equity method in respect of participating interests 29A Participating interests may be accounted for using the equity method. . Amendments to Section C of Part 2 of Schedule 1 (alternative accounting rules: non-IAS individual accounts) 39 In Section C of Part 2 of Schedule 1 (alternative accounting rules: non-IAS individual accounts)— a in paragraph 32 (alternative accounting rules), omit sub-paragraphs (4) and (5); b in paragraph 34 (additional information to be provided in case of departure from historical cost accounting rules)— i in sub-paragraph (2), for “a note to the accounts” substitute “the note on accounting policies (see paragraph 44 of this Schedule)”; and ii for sub-paragraph (3) substitute— 3 In the case of each balance sheet item affected, the comparable amounts determined according to the historical cost accounting rules must be shown in a note to the accounts. ; and c in paragraph 35(2) (revaluation reserve)— i after “revaluation reserve” insert “under “Members’ other interests””; and ii omit “, but need not be shown under that name”. Amendments to Section D of Part 2 of Schedule 1 (fair value accounting: non-IAS individual accounts) 40 In Section D of Part 2 of Schedule 1 (fair value accounting: non-IAS individual accounts)— a for paragraph 36(4) (inclusion of financial instruments at fair value) substitute— 4 Financial instruments which under international accounting standards may be included in accounts at fair value, may be so included, provided that the disclosures required by such accounting standards are made. ; b for paragraph 39 (other assets that may be included at fair value) substitute— Other assets that may be included at fair value 39 1 This paragraph applies to— a stocks, b investment property, and c living animals and plants. 2 Stocks, investment property, and living animals and plants may be included at fair value, provided that, as the case may be, all such stocks, investment property, and living animals and plants are so included where their fair value can reliably be determined. 3 In this paragraph “fair value” means fair value determined in accordance with generally accepted accounting principles or practice. ; and c in paragraph 41 (the fair value reserve), omit sub-paragraph (2). Amendments to Part 3 of Schedule 1 (notes to the accounts: non-IAS individual accounts) 41 In Part 3 of Schedule 1 (notes to the accounts: non-IAS individual accounts)— a for paragraph 42 (preliminary) substitute— Preliminary 42 1 Any information required in the case of an LLP by the following provisions of this Part of this Schedule must be given by way of a note to the accounts. 2 These notes must be presented in the order in which, where relevant, the items to which they relate are presented in the balance sheet and in the profit and loss account. ; b omit paragraph 43 (reserves); c in paragraph 45 (which specifies paragraphs requiring information supplementing the balance sheet) for “46 to 56” substitute “47 to 55”; d omit paragraph 46 (loans and other debts due to members); e omit paragraph 49 (investments); f for paragraph 50 (information about fair value of assets and liabilities) substitute— Information about fair value of assets and liabilities 50 1 This paragraph applies where financial instruments or other assets have been valued in accordance with, as appropriate, paragraph 36, 38 or 39. 2 There must be stated— a the significant assumptions underlying the valuation models and techniques used to determine the fair values, b for each category of financial instrument or other asset, the fair value of the assets in that category and the changes in value— i included directly in the profit and loss account, or ii credited to or (as the case may be) debited from the fair value reserve, in respect of those assets, and c for each class of derivatives, the extent and nature of the instruments, including significant terms and conditions that may affect the amount, timing and certainty of future cash flows. 3 Where any amount is transferred to or from the fair value reserve during the financial year, there must be stated in tabular form— a the amount of the reserve as at the date of the beginning of the financial year and as at the balance sheet date respectively, and b the amount transferred to or from the reserve during that year. ; g omit paragraphs 51 (financial fixed assets that could be included at fair value but included in excess of fair value) and 52 (information where investment property and living animals and plants included at fair value); h for paragraph 53 (reserves and provisions) substitute— Information about revalued fixed assets 53 1 This paragraph applies where fixed assets are measured at revalued amounts. 2 Where this paragraph applies, the following information must be given in tabular form— a movements in the revaluation reserve in the financial year, with an explanation of the tax treatment of items therein, and b the carrying amount in the balance sheet that would have been recognised had the fixed assets not been revalued. ; i at the end of paragraph 54(2) (details of indebtedness) insert “with an indication of the nature and form of any such security”; j for paragraph 55 (guarantees and other financial commitments) substitute— Guarantees and other financial commitments 55 1 The total amount of any financial commitments, guarantees and contingencies that are not included in the balance sheet must be stated. 2 An indication of the nature and form of any valuable security given by the LLP in respect of commitments, guarantees and contingencies within sub-paragraph (1) must be given. 3 The total amount of any commitments within sub-paragraph (1) concerning pensions must be separately disclosed. 4 The total amount of any commitments within sub-paragraph (1) which are undertaken on behalf of or for the benefit of— a any parent undertaking, fellow subsidiary undertaking or any subsidiary undertaking of the LLP, or b any undertaking in which the LLP has a participating interest, must be separately stated and those within paragraph (a) must also be stated separately from those within paragraph (b). ; k omit paragraphs 56 (miscellaneous matters – particulars where substitution of original stated amount because price or cost of asset unknown) to 58 (particulars of turnover); l for paragraph 59(2) and (3) (miscellaneous matters – inclusion of amounts relating to any preceding financial year in the profit and loss account) substitute— 2 The amount and nature of any individual items of income or expenditure of exceptional size or incidence must be stated. ; m omit paragraphs 60 (sums denominated in foreign currencies) and 61 (dormant LLPs acting as agents); and n after paragraph 59 (miscellaneous matters – amount relating to preceding financial year) insert— Post balance sheet events 62 The nature and financial effect of material events arising after the balance sheet date which are not reflected in the profit and loss account or balance sheet must be stated. Parent undertaking information 63 Where the LLP is a subsidiary undertaking, the following information must be given in respect of the parent undertaking of the smallest group of undertakings for which group accounts are drawn up of which the LLP is a member— a the name of the parent undertaking which draws up the group accounts, b the address of the undertaking’s registered office (whether in or outside the United Kingdom), or c if it is incorporated, the address of its principal place of business. Related party transactions 64 1 Particulars may be given of transactions which the LLP has entered into with related parties, and must be given if such transactions are material and have not been concluded under normal market conditions with— a members of the LLP that are related parties; and b undertakings in which the LLP itself has a participating interest. 2 Particulars of the transactions required to be disclosed under sub-paragraph (1) must include— a the amount of such transactions, b the nature of the related party relationship, and c other information about the transactions necessary for an understanding of the financial position of the LLP. 3 Information about individual transactions may be aggregated according to their nature, except where separate information is necessary for an understanding of the effects of the related party transactions on the financial position of the LLP. 4 Particulars need not be given of transactions entered into between two or more members of a group, provided that any subsidiary undertaking which is a party to the transaction is wholly-owned by such a member. 5 In this paragraph “related party” has the same meaning as in international accounting standards. . Omission of Schedule 2 (information about related undertakings where LLP not preparing group accounts) and Schedule 3 (non-IAS abbreviated accounts for delivery to Registrar of Companies) 42 Omit— a Schedule 2 (information about related undertakings where LLP not preparing group accounts); and b Schedule 3 (non-IAS abbreviated accounts for delivery to Registrar of Companies). Amendments to Part 1 of Schedule 4 (form and content of non-IAS group accounts) 43 In Part 1 of Schedule 4 (form and content of non-IAS group accounts)— a in paragraph 1 (general rules)— i in sub-paragraph (1), for “sub-paragraphs (1) and (2)” substitute “the following provisions of this Schedule”; ii after sub-paragraph (1) insert— 1A Paragraph 1A of Schedule 1 to these Regulations does not apply to group accounts. ; iii in sub-paragraph (2), after “out in” insert “Section B of Part 1 of”; and iv in sub-paragraph (3), after “account formats” insert “in Section B of Part 1 of that Schedule”; b after paragraph 2(1) (concerning the consolidated balance sheet and profit and loss account) insert— 1A Group accounts must be drawn up as at the same date as the accounts of the parent LLP. ; c after paragraph 9(5) (concerning the acquisition method of accounting) insert— 6 Negative goodwill may be transferred to the consolidated profit and loss account where such a treatment is in accordance with the principles and rules of Part 2 of Schedule 1 to these Regulations. ; d after paragraph 16 (certain information need not be disclosed if an undertaking is established under the law of a country, or carries on business, outside the UK ) insert— 16A Where an acquisition has taken place in the financial year and the merger method of accounting has been adopted, the notes to the accounts must also disclose the names and the addresses of the registered offices of the undertakings concerned (whether in or outside the United Kingdom). ; e for paragraph 17 (minority interests) substitute— Non-controlling interests 17 1 The formats set out in Section B of Part 1 of Schedule 1 to these Regulations have effect in relation to group accounts with the following additions. 2 In the Balance Sheet Formats there must be shown, as a separate item and under the heading “non-controlling interests”, the amount of capital and reserves attributable to shares in subsidiary undertakings included in the consolidation held by or on behalf of persons other than the parent LLP and its subsidiary undertakings. 3 In the Profit and Loss Account Formats there must be shown, as a separate item and under the heading “non-controlling interests”, the amount of any profit or loss attributable to shares in subsidiary undertakings included in the consolidation held by or on behalf of persons other than the parent LLP and its subsidiary undertakings. 4 For the purposes of paragraph 4 of Schedule 1 (power to adapt or combine items)— a the additional item required by sub-paragraph (2) above is treated as one to which a letter is assigned, and b the additional item required by sub-paragraph (3) above is treated as one to which an Arabic number is assigned. ; f in paragraph 18 (joint ventures)— i in sub-paragraph (2), after “consolidated accounts” insert “and sections 402 and 405 of the 2006 Act”; and ii after sub-paragraph (2) insert— 3 In addition to the disclosure of the average number of employees employed during the financial year (see section 411(7) of the 2006 Act), there must be a separate disclosure in the notes to the accounts of the average number of employees employed by undertakings that are proportionately consolidated. ; and g after paragraph 20 (use of equity method of accounting for associated undertakings) insert— Deferred tax balances 20A Deferred tax balances must be recognised on consolidation where it is probable that a charge to tax will arise within the foreseeable future for one of the undertakings included in the consolidation. Related party transactions 20B Paragraph 64 of Schedule 1 to these Regulations applies to transactions which the parent LLP, or other undertakings included in the consolidation, have entered into with related parties, unless they are intra-group transactions. . Amendments to Part 2 of Schedule 4 (information about related undertakings where LLP preparing non-IAS or IAS group accounts) 44 In Part 2 of Schedule 4 (information about related undertakings where LLP preparing non-IAS or IAS group accounts)— a for paragraph 22(3)(a) (subsidiary undertakings) substitute— a the address of the undertaking’s registered office (whether in or outside the United Kingdom), ; b in paragraph 25 (joint ventures)— i for sub-paragraph (1)(b) substitute— b the address of the undertaking’s registered office (whether in or outside the United Kingdom), ; and ii in sub-paragraph (1)(d), after “held by” insert “or on behalf of”; c for paragraph 26(3)(a) (associated undertakings) substitute— a the address of the undertaking’s registered office (whether in or outside the United Kingdom), ; d for paragraph 28(2)(a) (information required about other significant holdings of parent LLP or group) substitute— a the address of the undertaking’s registered office (whether in or outside the United Kingdom), ; and e for paragraph 31(2)(a) (information required where group has a significant holding in an undertaking which is not a subsidiary, and it is not a joint venture or an associated undertaking) substitute— a the address of the undertaking’s registered office (whether in or outside the United Kingdom), . Amendments to Schedule 5 (general interpretation) 45 In Schedule 5 (general interpretation)— a for paragraph 2(1) (definitions of financial instruments) substitute— 1 The expressions listed in sub-paragraph (2) have the same meaning as they have in Directive 2013/34/EU of 26 June 2013 on the annual financial statements etc. of certain types of undertakings . ; b in paragraph 8(5) (participating interests)— i before “Part 1 of Schedule 1” insert “Section B of”; and ii omit “and Part 1 of Schedule 3”; and c in paragraph 12(3) (staff costs), for “the LLP’s profit and loss account” substitute “the profit and loss account Format 2 in Section B of Part 1 of Schedule 1”. Review 46 After regulation 8 (general interpretation) insert— PART 5 REVIEW Review 9 1 The Secretary of State must from time to time— a carry out a review of the provisions of these Regulations to which amendments have been made by Part 3 of the Limited Liability Partnerships, Partnerships and Groups (Accounts and Audit) Regulations 2016 (“the 2016 Regulations”), b set out the conclusions of the review in a report, and c publish the report. 2 The report must, in particular— a set out the objectives intended to be achieved by those provisions, b assess the extent to which those objectives are achieved, c assess whether those objectives remain appropriate, and d if those objectives remain appropriate, assess the extent to which they could be achieved in another way which involves less onerous regulatory provision. 3 The first report under this regulation must be published before the end of the period of 5 years beginning with the date on which the 2016 Regulations come into force. 4 Subsequent reports under this regulation must be published at intervals not exceeding 5 years. 5 In this regulation, “regulatory provision” has the meaning given by section 32(4) of the Small Business, Enterprise and Employment Act 2015 . . PART 4 Amendments to the Large and Medium-sized Limited Liability Partnerships (Accounts) Regulations 2008 Amendments to the Large and Medium-sized Limited Liability Partnerships (Accounts) Regulations 2008 47 The Large and Medium-sized Limited Liability Partnerships (Accounts) Regulations 2008 are amended in accordance with this Part. Amendment to Part 1 (introduction) 48 In regulation 1(2) (interpretation), for the definition of “LLP” substitute— “LLP” means a limited liability partnership registered under the Limited Liability Partnerships Act 2000 . Amendments to Part 2 (form and content of accounts) 49 In regulation 4 (medium-sized LLPs: exemptions for non-IAS individual accounts), in the modified regulation 4 of the Large and Medium-sized Companies Accounts Regulations which is applied to LLPs— a for paragraph (2) substitute— 2A The individual accounts for the year need not comply with paragraph 45 (disclosure with respect to compliance with accounting standards) of Schedule 1 to these Regulations. 2B Paragraph 70 (related party transactions) applies with the modification that only particulars of transactions which have not been concluded under normal market conditions with the following must be disclosed— a members of the LLP that are related parties; and b undertakings in which the LLP itself has a participating interest. ; and b omit paragraph (3). Amendments to Section A of Part 1 of Schedule 1 (general rules: non-IAS individual accounts) 50 In Section A of Part 1 of Schedule 1 (general rules: non-IAS individual accounts)— a at the beginning of paragraph 1(3) (general requirements for format of balance sheets and profit and loss accounts) insert “Subject to paragraph 1A,”; b after paragraph 1 insert— 1A 1 The members of the LLP may adapt one of the balance sheet formats in Section B so as to distinguish between current and non-current items in a different way, provided that— a the information given is at least equivalent to that which would have been required by the use of such format had it not been thus adapted, and b the presentation of those items is in accordance with generally accepted accounting principles or practice. 2 The members of the LLP may adapt one of the profit and loss account formats in Section B, provided that— a the information given is at least equivalent to that which would have been required by the use of such format had it not been thus adapted, and b the presentation is in accordance with generally accepted accounting principles or practice. 3 So far as is practicable, the following provisions of this Section apply to the balance sheet or profit or loss account of an LLP notwithstanding any such adaptation pursuant to this paragraph. ; c in paragraph 6 (profit and loss account must show the amount of profit or loss before taxation), omit “on ordinary activities”; and d after paragraph 9 (requirement to have regard to the substance of a reported transaction or arrangement) insert— 9A Where an asset or liability relates to more than one item in the balance sheet, the relationship of such asset or liability to the relevant items must be disclosed either under those items or in the notes to the accounts. . Amendments to Section B of Part 1 of Schedule 1 (required formats for accounts: non-IAS individual accounts) 51 In Section B of Part 1 of Schedule 1 (required formats for accounts: non-IAS individual accounts)— a in balance sheet Format 1, in item K III , after “Other reserves” insert “, including the fair value reserve”; b in balance sheet Format 2— i for the heading “LIABILITIES” substitute “CAPITAL, RESERVES AND LIABILITIES”; and ii in item B III, after “Other reserves” insert “, including the fair value reserve”; c in profit and loss account Format 1— i in item 12, for “charges” substitute “expenses”; ii in items 13 and 14, omit “on ordinary activities”; and iii omit items 15 to 18; d in profit and loss account Format 2— i in items 5(b), 8 and 14, for “charges” substitute “expenses”; ii for item 7(b) substitute— b Amounts written off current assets, to the extent that they exceed write-offs which are normal in the undertaking concerned ; iii in items 15 and 16, omit “on ordinary activities”; and iv omit items 17 to 20; and e in notes on the profit and loss account formats, in the title to note (14), for “charges” substitute “expenses”. Amendments to Section A of Part 2 of Schedule 1 (accounting principles: non-IAS individual accounts) 52 In Section A of Part 2 of Schedule 1 (accounting principles: individual accounts)— a in paragraph 12 (consistent application of accounting policies), after “Accounting policies” insert “and measurement bases”; b in paragraph 13 (determination of amount of an item on a prudent basis)— i omit “and” at the end of sub-paragraph (a); and ii after sub-paragraph (b) insert— c all provisions for diminution of value must be recognised, whether the result of the financial year is a profit or a loss, d at the balance sheet date, a provision must represent the best estimate of the expenses likely to be incurred or, in the case of a liability, of the amount required to meet that liability, and e provisions must not be used to adjust the value of assets. ; and c after paragraph 15 (individual assets or liabilities must be determined separately in determining aggregate amount) insert— 15A The opening balance sheet for each financial year must correspond to the closing balance sheet for the preceding financial year. . Amendments to Section B of Part 2 of Schedule 1 (historical cost accounting rules: non-IAS individual accounts) 53 In Section B of Part 2 of Schedule 1 (historical cost accounting rules: non-IAS individual accounts)— a for paragraph 19(3) (provision for diminution in value of a fixed asset) substitute— 3 Provisions made under sub-paragraph (1) or (2) must be charged to the profit and loss account and disclosed separately in a note to the accounts if not shown separately in the profit and loss account. ; b in paragraph 20 (cessation of reasons for inclusion of provision about diminution in value)— i after sub-paragraph (1) insert— 1A But provision made in accordance with paragraph 19(2) in respect of goodwill must not be written back to any extent. ; and ii for sub-paragraph (2) substitute— 2 Any amounts written back under sub-paragraph (1) must be recognised in the profit and loss account and disclosed separately in a note to the accounts if not shown separately in the profit and loss account. ; c for paragraphs 21 (development costs) and 22 (goodwill) substitute— Intangible Assets 21 1 Where this is in accordance with generally accepted accounting principles or practice, development costs may be included in “other intangible assets” under “fixed assets” in the balance sheet formats set out in Section B of Part 1 of this Schedule. 2 If any amount is included in an LLP’s balance sheet in respect of development costs, the note on accounting policies (see paragraph 44 of this Schedule) must include the following information— a the period over which the amount of those costs originally capitalised is being or is to be written off, and b the reasons for capitalising the development costs in question. 22 1 Intangible assets must be written off over the useful economic life of the intangible asset. 2 Where in exceptional cases the useful life of intangible assets cannot be reliably estimated, such assets must be written off over a period chosen by the members of the LLP. 3 The period referred to in sub-paragraph (2) must not exceed ten years. 4 There must be disclosed in a note to the accounts the period referred to in sub-paragraph (2) and the reasons for choosing that period. ; d at the end of paragraph 27(1) (determination of purchase price or production cost) insert “and then subtracting any incidental reductions in the cost of acquisition”; e in paragraph 28(2)(d) (methods for determination of purchase price or production cost of stocks and fungible assets), for “similar to any of the methods mentioned above” substitute “reflecting generally accepted best practice”; and f after paragraph 29 (substitution of original stated amount where price or cost unknown) insert— Equity method in respect of participating interests 29A Participating interests may be accounted for using the equity method. Amendments to Section C of Part 2 of Schedule 1 (alternative accounting rules: non-IAS individual accounts) 54 In Section C of Part 2 of Schedule 1 (alternative accounting rules: non-IAS individual accounts)— a in paragraph 32 (alternative accounting rules), omit sub-paragraphs (4) and (5); b in paragraph 34 (additional information to be provided in case of departure from historical cost accounting rule)— i in sub-paragraph (2), for “a note to the accounts” substitute “the note on accounting policies (see paragraph 44 of this Schedule)”; and ii for sub-paragraph (3) substitute— 3 In the case of each balance sheet item affected, the comparable amounts determined according to the historical cost accounting rules must be shown in a note to the accounts. ; and c in paragraph 35(2) (revaluation reserve)— i after “revaluation reserve” insert “under “Members’ other interests””; and ii omit “, but need not be shown under that name”. Amendments to Section D of Part 2 of Schedule 1 (fair value accounting: non-IAS individual accounts) 55 In Section D of Part 2 of Schedule 1 (fair value accounting: non-IAS individual accounts)— a for paragraph 36(4) (inclusion of financial instruments at fair value) substitute— 4 Financial instruments which under international accounting standards may be included in accounts at fair value, may be so included, provided that the disclosures required by such accounting standards are made. ; and b for paragraph 39 (other assets that may be included at fair value) substitute— Other assets that may be included at fair value 39 1 This paragraph applies to— a stocks, b investment property, and c living animals and plants. 2 Stocks, investment property, and living animals and plants may be included at fair value, provided that, as the case may be, all such stocks, investment property, and living animals and plants are so included where their fair value can reliably be determined. 3 In this paragraph, “fair value” means fair value determined in accordance with generally accepted accounting principles or practice. . Amendments to Part 3 of Schedule 1 (notes to the accounts: non-IAS individual accounts) 56 In Part 3 of Schedule 1 (notes to the accounts: non-IAS individual accounts)— a for paragraph 42 (preliminary) substitute— Preliminary 42 1 Any information required in the case of an LLP by the following provisions of this Part of this Schedule must be given by way of a note to the accounts. 2 These notes must be presented in the order in which, where relevant, the items to which they relate are presented in the balance sheet and in the profit and loss account. ; b for paragraph 53 (information about fair value of assets and liabilities) substitute— Information about fair value of assets and liabilities 53 1 This paragraph applies where financial instruments or other assets have been valued in accordance with, as appropriate, paragraph 36, 38, or 39. 2 There must be stated— a the significant assumptions underlying the valuation models and techniques used to determine the fair value of the instruments or other assets, b for each category of financial instrument or other asset, the fair value of the assets in that category and the changes in value— i included directly in the profit and loss account, or ii credited to or (as the case may be) debited from the fair value reserve, in respect of those assets, and c for each class of derivatives, the extent and nature of the instruments, including significant terms and conditions that may affect the amount, timing and certainty of future cash flows. 3 Where any amount is transferred to or from the fair value reserve during the financial year, there must be stated in tabular form— a the amount of the reserve as at the date of the beginning of the financial year and as at the balance sheet date respectively, b the amount transferred to or from the reserve during the year, and c the source and application respectively of the amounts so transferred. ; c in paragraph 56(1) (information where investment property and living animals and plants included at fair value), after “in respect of” insert “stocks,”; d in paragraph 57(2) (reserves and provisions), after “same item” insert “in tabular form”; e in paragraph 59(4)(b) (details of indebtedness), after “nature” insert “and form”; f for paragraph 60 (guarantees and other financial commitments) substitute— Guarantees and other financial commitments 60 1 Particulars must be given of any charge on the assets of the LLP to secure the liabilities of any other person including the amount secured. 2 Particulars and the total amount of any financial commitments, guarantees and contingencies that are not included in the balance sheet must be disclosed. 3 An indication of the nature and form of any valuable security given by the LLP in respect of commitments, guarantees and contingencies within sub-paragraph (2) must be given. 4 The total amount of any commitments within sub-paragraph (2) concerning pensions must be separately disclosed. 5 Particulars must be given of pension commitments which are included in the balance sheet. 6 Where any commitment within sub-paragraph (4) or (5) relates wholly or partly to pensions payable to past members of the LLP separate particulars must be given of that commitment. 7 The total amount of any commitments, guarantees and contingencies within sub-paragraph (2) which are undertaken on behalf of or for the benefit of— a any parent undertaking or fellow subsidiary undertaking of the LLP, b any subsidiary undertaking of the LLP, or c any undertaking in which the LLP has a participating interest, must be separately stated and those within each of paragraphs (a), (b) and (c) must also be stated separately from those within any other of those paragraphs. ; g for the closing words in paragraph 64(2) (particulars of tax) substitute— These amounts must be stated separately in respect of each of the amounts which is or would but for paragraph 4(2)(b) be shown under the item “tax on profit or loss” in the profit and loss account. ; h for paragraph 67(2) and (3) (miscellaneous matters) substitute— 2 The amount, nature and effect of any individual items of income or expenditure which are of exceptional size or incidence must be stated. ; i in paragraph 70(1) (related party transactions), for “regulation 4 for exemption” substitute “regulation 4(2B) for a modification”; and j after paragraph 70 insert— Post balance sheet events 70A The nature and financial effect of material events arising after the balance sheet date which are not reflected in the profit and loss account or balance sheet must be stated. Appropriations 70B Particulars must be given of the proposed appropriation of profit or treatment of loss or, where applicable, particulars of the actual appropriation of the profits or treatment of the losses. . Amendment to Part 4 of Schedule 1 (special provision where LLP is a parent LLP or subsidiary undertaking: non-IAS individual accounts) 57 In Part 4 of Schedule 1 (special provision where LLP is a parent LLP or subsidiary undertaking: non-IAS individual accounts), omit paragraph 71 (LLP’s own accounts: guarantees and other financial commitments in favour of group undertakings). Amendments to Part 1 of Schedule 2 (provisions applying to all LLPs: information on related undertakings required whether preparing non-IAS or IAS accounts) 58 In Part 1 of Schedule 2 (provisions applying to all LLPs: information on related undertakings required whether preparing non-IAS or IAS accounts)— a for paragraph 1(3)(a) (subsidiary undertakings) substitute— a the address of the undertaking’s registered office (whether in or outside the United Kingdom), ; b for paragraph 4(2)(a) (significant holdings in undertakings other than subsidiary undertakings) substitute— a the address of the undertaking’s registered office (whether in or outside the United Kingdom), ; and c for paragraph 6(3)(a) (parent undertaking drawing up accounts for larger group) substitute— a the address of the undertaking’s registered office (whether in or outside the United Kingdom), . Amendments to Part 3 of Schedule 2 (LLP required to prepare group accounts: information on related undertakings required whether preparing non-IAS or IAS accounts) 59 In Part 3 of Schedule 2 (LLP required to prepare group accounts: information on related undertakings required whether preparing non-IAS or IAS accounts)— a for paragraph 16(1)(b) (joint ventures) substitute— b the address of the undertaking’s registered office (whether in or outside the United Kingdom), ; and b for paragraph 17(3)(b) (associated undertakings) substitute— b the address of the undertaking’s registered office (whether in or outside the United Kingdom). . Amendments to Schedule 3 (non-IAS group accounts) 60 In Schedule 3 (non-IAS group accounts)— a after paragraph 2(1) (concerning the consolidated balance sheet and profit and loss account) insert— 1A Group accounts must be drawn up as at the same date as the accounts of the parent LLP. ; b after paragraph 9(5) (concerning the acquisition method of accounting) insert— 6 Negative goodwill may be transferred to the consolidated profit and loss account where such a treatment is in accordance with the principles and rules of Part 2 of Schedule 1 to these Regulations. ; c after paragraph 16 (certain information need not be disclosed if an undertaking is established under the law of a country, or carries on business, outside of the UK) insert— 16A Where an acquisition has taken place in the financial year and the merger method of accounting has been adopted, the notes to the accounts must also disclose the names and the addresses of the registered offices of the undertakings concerned (whether in or outside the United Kingdom). ; d for paragraph 17 (minority interests) substitute— Non-controlling interests 17 1 The formats set out in Schedule 1 to these Regulations have effect in relation to group accounts with the following additions. 2 In the balance sheet formats there must be shown, as a separate item and under the heading “non-controlling interests”, the amount of capital and reserves attributable to shares in subsidiary undertakings included in the consolidation held by or on behalf of persons other than the parent LLP and its subsidiary undertakings. 3 In the profit and loss account formats there must be shown, as a separate item and under the heading “non-controlling interests”, the amount of any profit or loss attributable to shares in subsidiary undertakings included in the consolidation held by or on behalf of persons other than the parent LLP and its subsidiary undertakings. 4 For the purpose of paragraph 4(1) and (2) of Schedule 1 (power to adapt or combine items)— a the additional item required by sub-paragraph (2) above is treated as one to which a letter is assigned, and b the additional item required by sub-paragraph (3) above is treated as one to which an Arabic number is assigned. ; e in paragraph 18 (joint ventures)— i in sub-paragraph (2), after “consolidated accounts” insert “and sections 402 and 405 of the 2006 Act”; and ii after sub-paragraph (2) insert— 3 In addition to the disclosure of the average number of employees employed during the financial year (see section 411(7) of the 2006 Act), there must be a separate disclosure in the notes to the accounts of the average number of employees employed by undertakings that are proportionately consolidated. ; and f after paragraph 22 (related party transactions) insert— Deferred tax balances 22A Deferred tax balances must be recognised on consolidation where it is probable that a charge to tax will arise within the foreseeable future for one of the undertakings included in the consolidation. . Amendments to Schedule 4 (general interpretation) 61 In paragraph 2(1) of Schedule 4 (definitions of financial instruments), for the words from “Council Directive 78/660/EEC ” to the end, substitute “ Directive 2013/34/EU of 26 June 2013 on the annual financial statements etc. of certain types of undertakings and Council Directive 91/674/EEC of 19 December 1991 on the annual accounts and consolidated accounts of insurance undertakings .”. Review 62 After regulation 7 (general interpretation) insert— PART 4 REVIEW Review 8 1 The Secretary of State must from time to time— a carry out a review of the provisions of these Regulations to which amendments have been made by Part 4 of the Limited Liability Partnerships, Partnerships and Groups (Accounts and Audit) Regulations 2016 (“the 2016 Regulations”), b set out the conclusions of the review in a report, and c publish the report. 2 The report must, in particular— a set out the objectives intended to be achieved by those provisions, b assess the extent to which those objectives are achieved, c assess whether those objectives remain appropriate, and d if those objectives remain appropriate, assess the extent to which they could be achieved in another way which involves less onerous regulatory provision. 3 The first report under this regulation must be published before the end of the period of 5 years beginning with the date on which the 2016 Regulations come into force. 4 Subsequent reports under this regulation must be published at intervals not exceeding 5 years. 5 In this regulation, “regulatory provision” has the meaning given by section 32(4) of the Small Business, Enterprise and Employment Act 2015 . . PART 5 Qualifying partnerships: micro-entities’ accounts Amendment to the Small Companies (Micro-Entities’ Accounts) Regulations 2013 63 1 The Small Companies (Micro-Entities’ Accounts) Regulations 2013 are amended as follows. 2 Omit regulation 3(1)(a) (disapplication of the Small Companies (Micro-Entities’ Accounts) Regulations 2013 to qualifying partnerships). Amendment to the Partnerships (Accounts) Regulations 2008 64 1 The Partnerships (Accounts) Regulations 2008 are amended as follows. 2 After regulation 18 (revocation and transitional provisions etc.) insert— Review 19 1 The Secretary of State must from time to time— a carry out a review of regulations 4(1) and 9(1) and Part 1 of the Schedule , b set out the conclusions of the review in a report, and c publish the report. 2 The report must, in particular— a set out the objectives intended to be achieved by those provisions, b assess the extent to which those objectives are achieved, c assess whether those objectives remain appropriate, and d if those objectives remain appropriate, assess the extent to which they could be achieved in another way which involves less onerous regulatory provision. 3 In carrying out the review, the Secretary of State must have regard to how the provisions of Directive 2013/34/EU of 26 June 2013 on the annual financial statements etc. of certain types of undertakings are implemented in other Member States. 4 The first report under this regulation must be published before the end of the period of 5 years beginning with the date on which the Limited Liability Partnerships, Partnerships and Groups (Accounts and Audit) Regulations 2016 come into force. 5 Subsequent reports under this regulation must be published at intervals not exceeding 5 years. 6 In this regulation, “regulatory provision” has the meaning given by section 32(4) of the Small Business, Enterprise and Employment Act 2015. . PART 6 Amendments to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 Amendments to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 65 The Large and Medium-sized Companies Accounts Regulations are amended in accordance with this Part. 66 In paragraph 18(1) (information to be given in the notes to the accounts in respect of an undertaking in a joint venture dealt with by proportional consolidation) of Part 3 of Schedule 4, for sub-paragraphs (a) and (b) substitute— a the name of the undertaking, b the address of the undertaking’s registered office (whether in or outside the United Kingdom), . 67 After regulation 13 (general interpretation) insert— PART 6 REVIEW Review 14 1 The Secretary of State must from time to time— a carry out a review of the provisions of these Regulations to which amendments have been made by Part 6 of the Limited Liability Partnerships, Partnerships and Groups (Accounts and Audit) Regulations 2016 (“the 2016 Regulations”), b set out the conclusions of the review in a report, and c publish the report. 2 The report must, in particular— a set out the objectives intended to be achieved by those provisions, b assess the extent to which those objectives are achieved, c assess whether those objectives remain appropriate, and d if those objectives remain appropriate, assess the extent to which they could be achieved in another way which involves less onerous regulatory provision. 3 In carrying out the review, the Secretary of State must have regard to how the provisions of Directive 2013/34/EU of 26 June 2013 on the annual financial statements etc. of certain types of undertakings which are implemented by means of the provisions mentioned in paragraph (1)(a) are implemented in other Member States. 4 The first report under this regulation must be published before the end of the period of 5 years beginning with the date on which the 2016 Regulations come into force. 5 Subsequent reports under this regulation must be published at intervals not exceeding 5 years. 6 In this regulation, “regulatory provision” has the meaning given by section 32(4) of the Small Business, Enterprise and Employment Act 2015. . Neville-Rolfe Parliamentary Under Secretary of State for Business, Innovation and Skills Department for Business, Innovation and Skills 10th May 2016