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Changes to micro business reporting requirements move closer

Changes to micro business reporting requirements move closer

Contractor accountants may be interested to learn that the UK’s smallest businesses may soon be exempt from certain EU accounting regulations.

A recent vote in the European Parliament resulted in the decision to let member states decide which Fourth Company Law Directive obligations to impose on their SMEs.

The ICAEW’s head of reporting faculty, Dr Nigel Sleigh-Johnson, said the vote to exempt micro-businesses from the obligation to prepare and file annual accounts under EU laws is a step in the right direction, and something some UK organisations have been fighting for for almost three years.

The coalition has already started looking at alternative ways micro businesses could report in the future, but a lot more work needs to be done to ensure the final outcome will not have any adverse affects.

One major concern about the proposals to reduce reporting requirements is that banks and suppliers will still want to see financial information and therefore micro businesses will still need to demonstrate sound financial management.

The European Council still needs to approve the proposal, but that should just be a formality.

In order to qualify for the relaxed reporting rules, firms must satisfy at least two out of three criteria. They should have no more than €0.5 million in assets, their turnover must be less than €1 million and they should employ a maximum of 10 members of staff.

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Image: Macro of tiny Earth globe hanging on key chain by Horia Varlan

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