Government claims that this will save 42,000 businesses a total of £40m a year in audit fees.
Small company audit and account rules are currently stricter in the UK than is required by EU law. The Companies Act will be amended to bring small company audit rules in line with EU minimum requirements for next year.
For medium sized businesses government will push for EU restrictions to be lifted so that they no longer need their account independently audited.
And for very small business, with fewer than 10 employees, the government says it will push for exemptions to remove the requirement to produce two sets of accounts.
Cable said: “It’s important that we free small firms up so they can grow and drive the economy. The changes mean that small firms will be able to concentrate on growing and taking on more people instead of paperwork.”
The government will also look at relaxing the audit and account rules for subsidiaries. It is proposing that dormant subsidiaries with parent company guarantees could be exempted from the requirement to prepare and publish annual accounts. This would benefit up to 23,000 dormant companies, including those set up to hold assets or intellectual property, or in preparation for transactions at a future date.
Wholly owned non-financial subsidiaries with parent company guarantees could be exempted from audit.
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