Member News
Proposed new rules are set to save small and medium sized businesses (SME) millions in reporting and accountancy fees, according to the government.
The Department for Business, Innovation and Skills (BIS) has today launched a consultation on proposals to reduce financial reporting requirements which it says could save more than 100,00 businesses at least £600m in accountancy and administration costs a year.
At present, UK rules state that to classify as ‘small’ for accounting purposes, a company must have both a maximum balance sheet total of £3.26m and a turnover of no more than £6.5m.
European Union law classifies audit-exempt companies as those that meet at just one of these two criteria and have no more than 50 employees, and the department wants to soften UK law in line with this less stringent requirement.
Under the new proposals, SMEs would be eligible for meeting any two of the criteria, which could save an estimated £206m each year. The average audit for a small company is £9,500.
The government says that this is part of its wider focus on cutting red tape and reducing unnecessary burdens on business, in particular addressing the impact of European legislation.
Edward Davey, the minister responsible for corporate governance, said: "Over time, both the volume and costs of reporting requirements for UK companies have increased, and businesses have stressed to us the need for more flexible and targeted rules. Tackling these problems now will save UK SMEs millions every year and give them more opportunities to expand and grow their business.
"Audit is very valuable for many companies. But the proposals we’ve published today are aimed at removing EU gold plating and freeing up enterprise, which ultimately benefits the whole UK economy and will help put us on the path to long-term, sustainable growth. So I encourage businesses to read the consultation document and share their views with us."
The consultation is open from today and will run until December 29 2011.
Dods Parliamentary Communications Ltd
Have your say...
Please enter your comments below.