From time to time we will post news articles and announcements relating to the Firm and about various legal issues that may be of interest to you.
It has been estimated that 11,000 medium-sized businesses in the UK have the potential to benefit from changes to accounting rules, saving up to £8 million a year.
The changes were announced by government this week (1 September 2014) and are in accordance with the ne EU Accounting Directive, which is required to be implemented by the UK.
The changes allow companies to prepare and file with Companies House less detailed, simpler accounts.This will apply to balance sheets, profit and loss accounts and notes to financial statements. The level of detail required by each business will be dependent on their size and profitability. This is to be determined by three factors; - The average number of employees - The total of the balance sheet - The net turnover of the company at the date of the balance sheet date.
The UK government has put forward that it will use the upper limits of these thresholds to determine whether a business is to be classified as ‘small’, this will mean that 11,000 UK companies will move from the medium category to being described as small. This move can greatly benefit businesses currently classed as medium sized as they will be able to save time and money on preparing and filing accounts. 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.”
Under EU obligations, the UK must bring the Accounting Directive into UK law by 20 July 2015, but the government has proposed that they take advantage of the option that permits the changes to first apply in the financial year beginning on or after 1 January 2016. The government will also consult on whether companies should be able to apply the regulations ahead of this date.
Business Lawyers, London