Davey welcomes red tape cut for smallest companies
Business Articles
Submit Articles Back to Articles
Issued
on 30 May 2011 - BIS
Business Minister Edward Davey today welcomed an agreement on
new, simpler accounting rules which will benefit up to 1.5 million
small British companies, during a regular meeting of Business Ministers
from across the EU in Brussels.
Small companies, or
micro-entities, form the backbone of the British economy but have
limited resources to comply with the same accounting requirements as
larger companies. The agreement reached today will exempt these
companies from some obligations, potentially saving between £150-300
million per year in reduced administrative costs.
Mr Davey said:
“I greatly welcome the
progress made today in Europe to simplify the accounting rules for our
smallest companies. 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.
“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. We now need to build on this breakthrough and I
hope that further improvements can be agreed before the proposal
becomes law.”
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.
Notes:
- Edward Davey was attending the Competitiveness Council on
Monday 30 May 2011 in Brussels.
- The agreement introduces a new category of companies called
‘micro-entities’. A company can be defined as a micro-entity if it does
not exceed the limits of two of the following three criteria: a balance
sheet total of €250,000, a net turnover of €500,000 and an average
number of 10 employees during the financial year in question.
- The agreement simplifies the rules for the profit and loss
account and balance sheet reporting requirements. Member States will be
provided with the flexibility not to require publication of these
accounts. Simplified balance sheet information will still need to be
filed at Companies House.
- The European Commission first introduced a proposed
Directive that would give Member States the option to exempt
micro-entities from the 4th Company Law
Directive in 2009. Today’s agreement follows a long period of
negotiation and reflects the UK’s commitment to delivering this
agreement.
- Final agreement of the package requires a vote of the
European Parliament, which has strongly supported the objective to
reduce administrative burdens on very small companies.
- In March the government announced businesses with fewer
than 10 employees would be granted a moratorium from new domestic
regulation for three years, and also announced a public audit of almost
22,000 statutory instruments currently on the statute book.
About the Author
© Crown Copyright. Material taken from the BIS Department for Business, Innovation and Skills. Reproduced under the terms and conditions of the Click-Use Licence.
Follow us @Scopulus_News
Article Published/Sorted/Amended on Scopulus 2011-06-03 12:30:45 in Business Articles
