EU brings cheer for small companies

The European Commission's quest to rid businesses of unnecessary red tape has led to a proposal which will be welcomed by small company owners (of which there are more than 300,000 in the UK) throughout Europe.

"In order to aid tax simplification proposals, the EU is proposing to exempt small companies from the EU accounting directives. The directives, which are intended to ensure that accounts are prepared to common standards, create a great deal of complexity for smaller companies," says Gary Davie, corporate partner at Birmingham law firm Shakespeare Putsman.

The proposals would exempt 'micro entities' from the EU requirements.A micro-entity is one which fulfils two out of three criteria: fewer than ten employees; a balance sheet total under €500,000; and an annual turnover under €1 million.

Gary Davie says: "This is good news for small companies, which have had to deal with a sea of changes in accounting requirements that are designed to enable the accounts of larger companies to be more standardised."

If the proposals are adopted, the member states of the EU will be able, if they choose, to no longer require small companies to file their accounts.