Some 11,000 medium-sized UK businesses benefiting from the business support solutions of companies such as London Registrars will be pleased to hear of the reduction in their accounting paperwork that will result from a proposed change in changes in accounting rules.
The Government has said that savings of £8 million could be delivered to such businesses because of new measures that bring the EU’s new Accounting Directive into law, enabling the preparation and filing of simpler, less detailed directors report and accounts with Companies House. Currently these documents include the balance sheet, the profit and loss account and the notes to their financial statements.
Different businesses are presently required to prepare and submit accounting paperwork with different levels of detail, depending on the size of the business. This is determined by three thresholds, the balance sheet total, the average number of employees and net turnover at the balance sheet date.
The Government is proposing that the upper limits of these categories will be used to determine whether or not a business can be classified as ‘small’. This will see the reclassification of 11,000 firms from ‘medium’ to ‘small’ for accounting purposes, the less detail required in their reporting enabling them to save both time and money.
Business Minister Jo Swinson commented at the launch of a consultation document on the proposals: “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 deadline for the Government to bring the Accounting Directive into UK law is 20 July 2015. However, there is also an option, which the Government proposes to take up, for the changes to be first made applicable for financial years commencing on or after 1 January 2016. Consultation by the Government will take place on whether the new regulations should be applied by companies prior to this date.
We at London Registrars, encourage our clients for our business support solutions to take part in the consultation process in order to ensure that the responses are fully representative of the firms likely to be affected by the changes.