Small companies now allowed to be bigger … or smaller

One of the services I provide is company research including official registry documents and accounts. Many registries, including, the UK’s Companies House, make a significant amount of their data available free of charge. Some still charge for documents and a few insist that you register before you can even search for a company. ?If I know the information is freely available I usually point the client at the relevant website but a few people come back to me when they discover that the?interface is in a foreign language. If registration and/or payment are required I’m often asked to search on the client’s behalf because they just do not want the hassle of going through the registration process and recouping the cost of a small overseas transaction from their accounts department.

Regardless of whether the information is free or charged for, I often receive what I call a second stage request?for more detailed accounts. Why is there no Profit & Loss? Where is the revenue/turnover figure? I then have to explain?how?the reporting and filing requirements differ depending on the country, or even state; and then I have the joy of taking the client through small company exemptions. Some people I know have only just got their head around the changes introduced by UK Companies Act 2006. I now have to tell them that this has changed yet again.

In March 2015 the UK Government approved new regulations that implement the requirements of the new EU Accounting Directive. The changes came into effect in the UK from 1 January 2016. There are a number of changes, which may reduce yet further the amount of information that small companies are required to provide, and there are also changes to what is deemed to a be a “small” company. ?Small companies can now be bigger.

A company can now qualify as small if meets at least two of the three following criteria:

  • turnover not more than £10.2m (previously £6.5m)
  • balance sheet total not more than £5.1m (previously £3.26m)
  • average number of employees not more than 50 (no change)

Information on some of the other changes can be found on the Companies House Blog –?Changes to accounting standards and regulations. The key?ones are:

“… the removal of the ability for a small or medium-sized company to file abbreviated accounts with us at Companies House.?A company will now be required to file the accounts they prepare for their members at Companies House (although a small company or micro-entity will usually be able to choose not to file their profit and loss account or director’s report).”

“However, this does not mean that all small companies are now required to file full accounts, the very smallest companies may disclose less information by preparing micro-entity accounts.?Other small companies may, instead of filing full accounts, choose to prepare a set of abridged accounts for their members and then file these with us.”

So, as well as “small” being allowed to be bigger we now have even smaller companies or “micro-entities” who can choose to disclose less information. The whole thing is beginning to look as clear as mud!

The ICAEW has a useful overview of what is happening at The revised UK small companies regime?but if you want to keep up with the latest updates then follow the Companies House Blog.