Accounts Filing to be Reduced for Smallest Businesses
Businesses with fewer than ten employees could benefit from reduced accounting obligations, under new plans unveiled by the Government.
Currently, all UK companies are obliged to prepare full financial statements and then file financial information and an annual return at Companies House.
However, the Government has proposed simplifying the requirements for micro firms by introducing a shorter trading statement to replace the profit and loss account, and a “statement of position”, to include details of assets and creditors, in place of the balance sheet. A simplified annual return may also be introduced.
The aim, according to the Department for Business, Innovation and Skills (BIS), is to reduce red tape and reduce the costs associated with preparing accounts for smaller businesses
More than 3.5 million sole traders and firms employing fewer than ten staff, with an annual turnover of less than £440,000, would benefit, BIS said.
“Reducing unnecessary regulatory burdens on the smallest businesses can give them the freedom to innovate and grow ― which ultimately benefits the entire economy,” said minister for corporate governance Edward Davey.
Clive Lewis, head of enterprise at the Institute of Chartered Accountants in England and Wales, said support from external agencies was vital if the new requirements were to work properly.
“This includes the finance providers, HM Revenue & Customs and credit reference agencies, especially,” he said.
However, Accountancy Extra managing director Stuart Ramsay said that the new rules may have limited impact on small businesses.
“The intention might be to reduce red tape, but it won’t necessarily save firms time or money.”
“Businesses will still have to produce their full records for HMRC, and by the time firms have adjusted to the new format, it’s unlikely to be less onerous than preparing a full set of accounts.”
A BIS spokesman said that the plans were currently under review, and would not come into force until at least 2013.