Measures to exempt micro-businesses from the requirement to file a profit and loss account with Companies House have been given the go-ahead by the government.
Applying to financial years ending on or after September 30th 2013, the exemption means that the UK’s smallest companies can draw up an abridged balance sheet and profit and loss account instead.
The move, aimed at easing the administrative burden on 1.5m small companies, follows a consultation that found the existing accounting requirements for firms were too onerous for the tiniest of traders.
To be eligible for the exemption, which is voluntary, a trader’s company must have 10 employees – or fewer, and show a balance sheet under £316,000, with net turnover of £632,000 or below.
Business minister Jo Swinson reflected: “The measures announced today are just one of the ways we're cutting bureaucracy, letting micro-businesses get on with running their enterprises and creating jobs.”
Despite the government’s claim to be cutting red tape for the smallest companies, nine out of ten businesses believe that the UK’s regulatory environment has not improved in the last 12 months.
According to the Institute of Chartered Accountants in England & Wales, 70 per cent of firms are not familiar with the state’s ‘one in, two out’ policy, under which only one rule should be introduced for every two that are removed.
Of those firms which are familiar with the policy, only 13 per cent believe it will help to pare back the regulatory burden on their own enterprise, indicating that the bulk of businesses do not expect it to succeed.