Cutting "red tape" accountancy & reporting fees for SMEs
More than 100 thousand UK businesses could save more than £600 million in accountancy and administration costs every year under the new proposal.
Basically, the consultation on Audit Exemptions and Change of Accounting Framework sets out plans to allow more small companies to decide whether or not to have an audit.
Currently, for a company to be classified as “small” for accounting purposes, they must comply with two out of three of the following EU gold plating rules:-
- No more than 50 employees
- A balance sheet total of no more than £3.26 million
- Nor more than £6.5 million in turnover
In the UK, small companies must fulfil both the balance sheet and turnover criteria to obtain an audit exemption certificate. Under the new proposals, UK SMEs would be eligible for audit exemption by meeting any two of the three criteria – a saving of an estimated £206 million per year.
The Government is also proposing to introduce legislation sometime during 2012 to exempt most subsidiary companies from mandatory audit, providing their parent company is prepared to guarantee their debts – a saving of an estimated £406 million per year.
It is anticipated that by removing EU gold plating rules the UK economy will benefit and SMEs will have the opportunity to expand and grow their business.
If you think you may be eligible you need to contact your Accountant who will be able to advise you in the first instance.