Thousands of small companies are to be spared from red tape after a government shake-up on business regulations.
Business Minister Jo Swinson announced the interim results from the Company and Commercial Law Red Tape Challenge, revealing that half of the 115 regulations on the day-to-day running of a company and the preparing and filing of accounts are to be scrapped, merged or simplified.
The aim is to reduce redundant legislation and ensure that the remaining regulations are simpler to understand.
Swinson says, ‘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 told us through this bureaucracy cutting exercise just how time consuming some of the form filling is and how the rules they have to abide by are completely redundant. We have heard them loud and clear and are now taking action.’
Danielle Stewart, a chartered accountant at Baker Tilly Tax and Accounting says, ‘It is great to see that the extensive work performed so far on the Company Law aspects of The Red Tape Challenge will now be progressed in so many ways.
‘I am also delighted to report that many of the suggestions made by respondents to the various outreach programmes initiated by the Department for Business, Innovation and Skills have already resulted in some helpful changes to the way that small proprietors can interact with Companies House and HMRC.’
The government also announced a reform of the company and business names regime, with proposals including the removal of 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, among others, examples such as; ‘Accredited’; ‘British’; ‘Group’; ‘International’; ‘Benevolent’; ‘Holding’; ‘Institute’; and ‘University’.
There were also proposals for companies with less than ten employees (micro-businesses) to be freed from red tape by removing certain accounting requirements.
Under the proposal, the UK’s 1.2 million micro-businesses would be able to prepare much reduced annual accounts, being able to draw up shortened balance sheets and profit and loss accounts, remaining exempt from the requirement to file the profit and loss account.