EU Accounting Directive could damage UK economy

A RADICAL new accounting regime set to shake-up the UK’ssmall business reporting landscape could pose a risk to the British economy as an unplanned by-product of an attempt to slash red tape.

That’s the stark warning from Nigel Sleigh-Johnson, the ICAEW’s Financial Reporting Faculty head as the government publishes its final recommendations on how the new EU Accounting Directive will be implemented in the UK.

Sleigh-Johnson said: “Only time will tell whether the reduction in the information required in small company accounts is a sensible reduction in red tape or a source of risk to the UK economy. ICAEW for one has persistently warned against the potential risk that over-simplifying reporting requirements can have on the ability of small companies to secure credit.”

Under the BIS proposals, set to be enshrined in company law by July 2015 and become effective for financial years beginning on or after 1 January 2016, the most profound changes relate to small businesses.