The firms will only having to send their simplified accounts to the taxman, which would in turn be responsible for passing the accounts onto Companies House. This sounds like a sensible move from Brussels.
Until now, in many countries very small firms (called in EU jargon "micro-entities") have had to file a full set of financial statements, including the balance sheet and profit and loss account, and in some countries are required to disclose this through publication in a national newspaper.
The new rules are voluntary but allow countries to simplify the rules for small firms in four ways.
- allow micro-entities to draw up a very simplified balance sheet and profit and loss account
- require very limited disclosure by way of notes to the financial statements
- relieve micro-entities from the obligation to calculate year-end accruals and prepayments in respect of certain types of expenses.
- replace the current publication regime by a simple obligation for micro-entities to file the balance sheet information
Competent authorityThe EU said: "Today, in many countries, micro entities have to send their balance sheet information to various bodies including the tax administration, the company register and statistical authority, in addition to publishing the information in a national gazette. Under the revised Directive, a single competent authority in the Member State can receive this information and act as a "one-stop-shop".
The problem will be finding a "competent" authority, as any small business owner will tell you.
The EU commissioner responsible for internal market and services, Michel Barnier, said: "I am very pleased that today the Council has given its final agreement to measures that will significantly simplify the preparation of annual accounts for more than five million of Europe's smallest companies - so-called 'micro-entities.
"These reductions in red tape will free up micro-entities' resources so they can be invested in growing their businesses and deliver the growth that Europe needs to exit the crisis."
Further savingsWith a further round of simplification in the pipeline, the EU reckons the "aggregate administrative burden reduction potential is estimated at around €6.3bn".
Small businesses have been the powerhouse of the UK economy for years. Giving small business owners a break from overly stringent accounting and reporting rules is good news for them, even if it is bad news for fee-charging accountants.