The changes, sparked by the company and commercial law part of the Red Tape Challenge, which gave businesses a chance to say which laws burdened them most, will see reforms to the company names system and hopefully require micro-businesses to prepare simpler annual accounts, including shortened balance sheets and profit and loss accounts.
It is thought that thousands of businesses are to be spared red tape if the changes go ahead and 115 regulations on the day-to-day running of a company and the preparing and filing of their accounts are scrapped, merged or simplified.
The Companies Act is understandably a complex bit of law. However, there are many areas where this has resulted in companies unnecessarily being tied down by red tape. Businesses complained that the form-filling process was time consuming and the rules they have to abide by completely redundant.
The government also announced:
- Reform of the company and business names regime. Proposals include removing certain names from the list of words which require approval from specified bodies before being registered at Companies House. The list of 161 words and expressions contains, examples such as; 'Accredited'; 'British'; 'Group'; 'International'; 'Benevolent'; 'Holding'; 'Institute'; and 'University'.
- Measures to simplify the regulations a company must abide by when displaying the company name at their premises, on paper or online. Currently, companies must display their registered name at their registered office, and all other business premises, and on all business documentation. The proposal will enable them to find all the rules together in one place.
- Proposals for companies with fewer than 10 employees to be freed from red tape by removing certain accounting requirements. Under an exemption proposal, micro-businesses would be able to prepare much reduced annual accounts. The 1.2 million micro-businesses in the UK will be able to draw up shortened balance sheets and profit and loss accounts, and will remain exempt from the requirement to file the profit and loss account.
- Other amendments to the Companies Act which will simplify the system for companies to use assets to raise finance, streamline company annual reporting requirements and repeal certain filing obligations when companies change their auditors.
For further advice on your company accounting and legal responsibilities, members can call our helpline on 0845 130 1722.
Good news for micro-businesses, the government has announced plans to amend the Companies Act 2006 and cut red tape for firms with fewer than ten employee. Over half the regulations governing the daily running of a company will be scrapped or simplified following consultations. Find out what this means for your small business.