Some businesses that are currently classed as medium-sized for accounting purpose would be considered small under plans to enforce the new EU Accounting Directive in the UK. This is because the department for Business, Innovation and Skills (BIS) is proposing to use the EU’s maximum thresholds for defining s small company instead of the minimum.
Whats this mean for your business?
Well if your company meets two of the following three criteria:
- gross assets of no more than £5.1 million (currently £3.26 million)
- turnover of no more than £10.2 million (currently £6.5 million)
- no more than 50 employees
you will be able to submit less detailed accounts – essentially just an abbreviated balance sheet and notes.
The government intends to introduce these changes from accounting periods beginning on or after 1 January 2016.
Does this mean you don’t need an audit?
Currently, the audit exemption thresholds are tied to the small company limits. So if your company qualifies as small under the new limits, does this mean you can cut costs by dispensing with the annual audit? Unfortunately, not at this moment. In its consultation, BIS propose no change to the audit thresholds and so will remain at the existing small company limits.