How the EU Accounting Directive will change small business accounts

The introduction of new accounting rules for small business, as a result of the EU Accounting Directive, means that the definition of a small business now equates to a £10.2m turnover threshold, which brings thousands of companies into the new regime and raises compliance issues, particularly on abbreviated accounts, says Julia Penny FCA

On 20 January 2015, the Department for Business, Innovation and Skills (BIS) issued its response, following the consultation regarding the implementation of the new EU Accounting Directive. The conclusions are likely to have a radical impact on small companies in the UK.

As was widely expected, the small company limits will increase to the maximum permitted in the directive for accounting periods commencing on or after 1 January 2106. So the turnover limit rises to £10.2m and the balance sheet total limit to £5.1m.

Not only does this mean that 11,000 extra companies will be able to access the small company accounting regime, but the response proposes they will also be able to access the small company audit exemption.

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