Financial Statements
Form 5471, Form 5472, Form 8858
Annual accounts for UK companies with US owners and US subsidiaries of UK groups, prepared so they also support the US and UK tax filings.
What does Financial Statements involve?
Statutory accounts, lender reporting and tax returns all draw on the same figures, but each country and each reader wants them presented differently. A UK company files accounts at Companies House under UK standards. A US subsidiary answers to its UK parent's group accounts, its lenders and the IRS.
Forms and filings involved
- Form 5471
The information return a US citizen or green card holder files for a UK limited company they own, control or have acquired an interest in.
- Form 5472
Reporting for US corporations with a significant foreign owner, and for single-member US LLCs owned by someone outside the US.
- Form 8858
The information return for a foreign entity the IRS disregards, or a foreign branch, such as a UK operation of a US business.
Accounts prepared for readers in both countries
Every UK limited company prepares annual accounts under the Companies Act and files them at Companies House, and those accounts are the basis for its corporation tax computation.
Smaller companies can usually file reduced accounts and may be exempt from audit, subject to conditions. For a company with a US shareholder, the same accounts become the starting point for the Form 5471 schedules, so the notes on related parties, loans and dividends should be written with the US form in mind.
US private companies have no general obligation to file accounts publicly. Their financial statements are driven by what lenders, investors and any UK parent require, and by the federal return, whose balance sheet and book-to-tax reconciliation schedules draw on them. A US subsidiary of a UK group usually keeps books under US principles for local use and converts them to the group's framework at year end. Listing the differences each year stops the two versions drifting apart.
Timing needs managing because the deadlines in the two countries rarely coincide. UK accounts and the corporation tax return follow the company's own year end, while Form 5471 is filed with each US owner's personal return on the owner's own timetable. Draft figures therefore often have to be used for a US filing before the UK accounts are signed. We record which version of the figures each filing used, and correct it where the final accounts differ materially.
Statements and reconciliations we produce
- 01
- UK statutory accounts prepared under the applicable UK accounting standard
- 02
- US subsidiary statements converted to the UK group's reporting framework
- 03
- Book-to-tax reconciliations for Form 1120 and the UK corporation tax computation
- 04
- Balance sheet and income statement schedules supporting Form 5471
- 05
- Management accounts in both currencies for boards and lenders
Who this is for
UK companies owned in whole or in part by US persons
- US subsidiaries reporting into a UK parent's consolidated accounts
- Businesses whose US lender or investor asks for US-style statements
- Directors who need draft figures before a US filing deadline
Why US UK Tax Returns
Each return is prepared with the other country's return open beside it, so a credit, election or disclosure on one is supported by the other.
One File
US and UK returns prepared in the same engagement and reconciled line by line.
Primary Sources
Every position traced to the Code, the treaty, IRS instructions or HMRC guidance.
Scope First
Returns, forms, years and fee agreed in writing before work begins.
The Same People
The team that files this year carries the elections and credits into the next.
Questions we are asked
Does my UK company need an audit because it has an American shareholder?
Not because of the shareholder alone. UK audit exemption turns on the company's size and status, and a small company that qualifies can usually opt out, although shareholders holding enough of the shares can require one. A US investor may ask for audited accounts under the investment agreement, and a lender may too. The IRS does not require audited accounts for Form 5471, but it does expect the figures to be supportable.
What are the main differences between UK accounts and US GAAP statements?
The broad structure is similar, but recognition and presentation differ in places, including leases, development costs, deferred tax and some financial instruments. The size of the gap depends on which UK standard the company uses and what the business does. For tax filings the key point is traceability: each adjustment between the UK figures and those reported to the IRS should be listed so it can be followed in later years.
Our US subsidiary's accounts are only used by the UK parent. Why do they need their own tax reconciliation?
Because the federal return starts from book income and reconciles it to taxable income on its own schedules, and larger corporations complete a more detailed version. Items consolidated away at group level, such as intercompany charges and management fees, remain real transactions for the subsidiary's US return and for Form 5472. A clean reconciliation also makes an IRS examination of those charges much simpler to answer.
Primary sources
What this page says is drawn from the official material below. Read it yourself; we would rather be checked than trusted.
Last reviewed
From the Blog
Ready to talk it through?
Tell us where you live, what you hold and which years are outstanding. We will say what applies and what it involves before any work begins.
Contact us