Simpler accounting rules proposed

Thousands of medium-sized businesses will be able to submit simpler accounts with Companies House under government proposals.

Some businesses that are currently classed as medium-sized for accounting purposes would be considered 'small' under plans to enforce new EU rules in the UK. This is because the government plans to use the EU's maximum thresholds for defining a small company instead of the minimum.

This means firms could submit less detailed accounts if they have:

  • a balance sheet of no more than £5.1 million
  • turnover of no more than £10.2 million
  • no more than 50 employees.

Some 11,000 medium-sized firms would stand to save around £8 million annually as a result of the change, according to government estimates.

The business minister Jo Swinson said:

"Any measures that cut red tape and allow more flexibility for financial reporting are a step in the right direction. All our companies should be concentrating on growing their business, not spending their time filling out paperwork for their financial accounts if they really don't have to."

The government intends to introduce the changes for financial years beginning on or after 1 January 2016.
The consultation on these proposals runs until 24 October 2014.

Dr Nigel Sleigh-Johnson of the Institute of Chartered Accountants in England and Wales said:

"Tackling excess regulation of UK businesses is something we strongly support. However, it is important in considering these proposals to not forget that sound financial management and transparent and useful financial information are critical to the success of any business, regardless of size. Therefore, it is important that the right balance is reached by government and standard setters with regards to the type and amount of financial information required by law."