Business groups welcomed the move, but warned ministers needed to deliver such steps regularly for companies to gain confidence in the government’s deregulation drive.
At present, European Union rules mean that to classify as “small” for accounting purposes, a company must comply with two out of three criteria: having no more than 50 employees, a balance sheet of no more than £3.26m and turnover of no more than £6.5m.
However, to obtain an audit exemption in the UK, small companies must fulfil both the balance sheet and turnover criteria. Under the new proposals, UK SMEs would be eligible for audit exemption by meeting any two of the three criteria, saving an estimated £206m a year. An average audit for a small company costs £9,500.
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