The European Union’s financial and economic affairs council agreed a new directive on Tuesday 21 February that allows member states to exempt very small companies from mainstream accounting and financial reporting obligations. A recent consultation document on company law reforms said the UK will look to implement the changes “as soon as possible”
When the EU directive is enacted in the UK, companies will be allowed to apply the simplified reporting regime if they stay below two of the following thresholds:
- balance sheet total of €350 000 euro
- Net turnover of €700 000 euro; and
- average of 10 employees during the financial year.
Recent research suggests that Micro companies look likely to be required to produce:
- A simplified, cash-based trading statement to replace the profit and loss account;
- A statement of position; and
- A simplified annual return.
It is estimated that around 1.5m micro-enterprises will be able to take advantage of the changes.