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Who can quantify the benefit, please?
I pose a question here - to be answered preferably by those who support the micro-entities proposals -
"please quantify the benefit"
So far as I can see the benefit is less that 5 pence a year per business.
I am very disappointed at the FSB's support for this little-or-no-benefit measure and would have hoped that they could have instead addressed / campaigned against really serious extra costs imposed by the following measures:
# RTI reporting of payroll transactions
# iXBRL filing of CT computations, accounts and returns
# Auto enrolment
The first two items might cost a micro-entity businesses around £_200 to £_300 per year.
However the third item, Aweb now reports might cost small businesses close to £_9,000 in setting up costs!
See:
https://www.accountingweb.co.uk/article/full-cost-auto-enrolment-revealed/547095
If you want to cut red tape
for small/micro businesses, then a good starting point would be to have ONE reference number for an entity, used for all taxes, and one central tax pot for each company, and ONE registration process.
At the moment the process of registering for all the various taxes, getting numerous different reference numbers, having to get several authority forms signed, getting it all set up online etc just takes way too long.
And the problems for micro businesses where they may have overpaid one tax but owe money on another (CIS deductions for a start) create unnecessary strains on companies.
Until they get this basic right all the tinkering around the edges that they like to do so they can be seen to be doing something 'to help' small businesses is all just so much hot air.
Strange
Don't that FSB have anyone on their team who actually understands the compliance regimes and their implications. This will have no impact what so ever except for some fool business people unwisely trying to do a DIY. Then having to pay a proper accountant loads of dosh to clear up the mess
Missed opportunity
I agree that the savings will be negligible, and what the commentary in the article shows is the ignorance in Government and, it would appear, the FSB as to what is involved in the actual process of preparing accounts. Company accounts are more costly to produce than sole trader accounts because of the necessity to ensure compliance with the Companies Act - simply replacing one set of rules with another DOES NOT SAVE ANY COST.
When this relaxation was being mooted about 4 years ago I had in my mind that the deregulation would take the form of exemption from the provisions of the Companies Act of the detailed disclosure requirements and what we would end up with, effectively, for these companies would be glorified sole trader accounts ie a detailed P&L, balance sheet, some accounting policies and a couple of notes. A set of accounts running to 4/5 pages rather than 13/14. The added advantage would be that the clients could actually UNDERSTAND them. Is this not what the accounts are really for? Now that set up may well have saved £200 - £300 for some clients.
I don't know if any of the readers actually took part in the consultation? I did - and I was gobsmacked at the proposals. For instance, the bulk of the companies which fall into the Micro entities are owner managed one-man-bands ie there is one shareholder who is also the sole director. Why on earth does he need a set of accounts which has a directors report which tells him that he is the director? Yet the proposals in the consultation were adamant that a directors report was a important part of the new accounts format.
As it is, all that is filed for these companies currently is a balance sheet and couple of notes. I don't see why the abbreviated accounts format currently in place can not be supplemented by a simple P&L for the information of the directors (& HMRC) only to arrive at the "Full" accounts. After all, when you discuss the accounts with your microl company clients, how many of you actually go through the notes to the accounts with them? Or do you, like me, just run through the detailed P&L and balance sheet?
Not surprised
Why are we surprised at yet another variation on the theme of interfering with a system that works perfectly well from a team of politicians who it is apparent know nothing about the areas they legislate on and continue to overwhelm us with their incompetence at running the country as a whole!
investors in small businesses, as they are described here, are going to have zero interest in published unaudited statutory accounts of any kind. In fact I think you would struggle to find anyone who has any interest in them. Its just another complication in an already bloated disclosure regime.
real life
And you have to wonder what those that comment on behalf of the accounting bodies are thinking. IMHO it sounds like they are desperately trying to grab every last penny of business, rather than being realistic about the stakeholders.
In most cases micro businesses just need a reliable system for records, and then it's a case of a few hours work at the end of the year to produce the current abbreviated statutory accounts. A P&L needs to be produced anyway to be able to complete the CT return.
In the case that the business is in need of additional financing, then they will need to produce some form of business plan, and at the minimum this would start from numbers that at least look like they bear some resemblance to the most recent filed accounts.
When the business is growing and getting to the top end of the cutoff, they are likely to be getting other demands that mean they need to produce additional information anyway.
The only stakeholder I can think are interested in more detail in smaller businesses would be HMRC.
savings
I have always wondered what the FSB benefits are?
I agree that there could be lots of other cost saving things that the governement could do for micro business - RTi for one, VAT, new pension regulations - who is going to do and pay for all that new regulation?
They seem to ask people that don't understand what actually goes on in the real world in the first place. perhaps they should ask small accountantancy firms what goes on. How much did anyone save when self assessment came out - we did not lose clients. They still wanted accountants to do the forms - they are not easy enough for Jo Public to complete.