3rd June 2011
Small limited companies will no longer be obliged to file annual accounts with Companies House, following an agreement in the European Parliament to simplify accounting rules.
Under the agreement reached by EU ministers, a new category of companies, so-called micro-entities, will not be obliged to file their profit and loss account and balance sheet with Companies House. However, simplified balance sheet information will still need to be filed.
To be classed as a micro-entity a company must have a balance sheet total of €250,000 or a net turnover of €500,000, and fewer than ten staff.
At present, all limited companies are required to file a copy of their annual accounts at Companies House. Failure to deliver accounts on time is a criminal offence and late filed accounts incur penalties.
According to the Department for Business, Innovation and Skills, 1.5 million small companies in the UK will benefit from the agreement, saving up to £300 million in administrative costs.
“This is a significant step in reducing red tape and a clear signal that we will take action to stop our smallest companies being held back by excessive regulation.”
said business minister, Edward Davey.
“I believe this shows what can be achieved by a positive and constructive engagement with the European Union ― the first ever exemption for micro-entities from an existing EU directive.”
EU member states will now discuss the measures with members of the European Parliament, who must also give their approval before the new rules can enter into force.
“The final agreement on this requires a vote in the European Parliament, but that should just be a rubber stamping exercise.”
said European Parliament spokeswoman, Paola Buonadonna.
“The vote will take place in the next few months.”
Forum of Private Business spokesman, Chris Gorman, said:
“We welcome anything that makes life a bit easier for small firms, but it’s a drop in the ocean when you look at all the other red tape they have to deal with.”