The government plans bringing in simpler accounting rules for medium-sized companies to help them save cash in manual and electronic reporting.
An estimated 11,000 UK medium-sized businesses could benefit to the tune of £8 million a year as result of proposed changes to accounting rules announced by government.
The planned measures, which are part of bringing the EU’s new Accounting Directive into UK law, mean that companies can prepare and file simpler, less detailed accounts with Companies House. These documents currently include the balance sheet, the profit and loss account and the notes to their financial statements.
The actual level of detail they prepare and submit depends on their size as a business. This is decided by reference to three thresholds, namely the average number of employees, the balance sheet total, and the net turnover at the balance sheet date.
The UK government wants to use the upper limits for these categories when determining if a business is classified as "small". This would see 11,000 companies, for accounting purposes, move from being "medium-" to "small-sized" companies. This would allow them the opportunity to save time and money as their reporting needs to be less detailed.
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 UK is required to bring the Accounting Directive into UK law no later than 20 July 2015. However, the government proposes to take up an option of applying it on or after 1 January 2016. But the government is now consulting on whether companies can apply the streamlined reporting well before this date.