Hi ,
The Department for Business
Innovation and Skills (BIS) recently published the Government’s formal response to the comments received on the 2014 consultation paper on the implementation of the new EU Accounting Directive (the ‘Directive’) in the UK.
Although a full assessment of the many changes to UK company law will have to await approval of the final regulations, the
Government response gives a clear indication of what the most significant changes will be. These are summarised below.
Thresholds
The accounting thresholds for small and medium-sized companies and groups are set to increase as set out in the table below.
BIS is consulting separately on whether or not the small company audit exemption limits
should remain aligned with the accounting thresholds and therefore increase in line with them. Further information on this separate consultation can be found in section 4.6 of the BIS discussion document on UK
implementation of EU audit reform.
Filing requirements
One unanticipated result of the detailed changes to EU law means that there will no longer be an option for small and medium-sized companies to file abbreviated accounts. Small companies will still be able to choose not to file their profit and loss account and/or directors’ report.
Small companies (excluding charitable companies) will now have the option, subject to shareholder approval, to both prepare and file a new form of simplified accounts, referred to as ‘abridged accounts’.
Changes to disclosure notes
The Directive restricts significantly the information that can be required in small company
accounts, but also introduces some new requirements. For example, current disclosures which require certain information on share capital, listed investments and dividends can no longer be required by law. However, changes made elsewhere in the Directive mean that small companies will be required to disclose other details such as the average number of employees and off-balance sheet arrangements.
What happens now?
The changes to company law are expected
imminently. Draft regulations are to be laid before Parliament
very soon and, once approved, will come into effect on 6 April 2015 and apply to financial years beginning on or after 1 January 2016, with early adoption permitted.
In addition, the Financial Reporting Council (FRC) will be consulting again, in more detail, on the proposed changes to
UK GAAP arising from the Directive. Further information on the FRC’s plans can be found here.
Noel
Guilford
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