New moves to cut red tape for small and medium-sized companies have been announced by Patricia Hewitt, Secretary of State for Trade & Industry.
The audit threshold for small companies is to be raised from £1 million annual turnover to £5.6 million, giving 69,000 companies exemption from accounts audits. The measure is expected to save companies at least £94 million a year.
Hewitt also announced that the Government is raising the turnover limit that defines small and medium-sized companies (SMEs). According to the DTI, more companies will be able to take advantage of tax incentives on ICT equipment and plant and machinery.
The new limits will be £5.6 million turnover for small companies and £22.8 million turnover for medium-sized companies. Most small companies will no longer be required to have their accounts audited.
The new measures are expected to come into force in January 2004.
‘The UK has the fastest growing economy in Europe. SMEs are an essential part of our economy and this will help them to be competitive and maintain the UK’s pole position,’ said Hewitt.
‘This change will cut costs and lighten the regulatory burden on these businesses. More companies will be able to decide for themselves whether to undertake an audit of their business.
‘We consulted widely on the proposals and recognise the audit provides valuable assurance to users of company accounts. Nonetheless, the balance of evidence shows that that small companies will benefit from having the choice,’ added Hewitt.