The simple life
Small companies have to tell the authorities twice what their turnover and
profits have been in the previous year – HM Revenue & Customs needs to know
so it can take its cut, while Companies House needs to know to add the
information to a public record.
My idea to make life a little easier for the harassed company accountant and
secretary is to say ‘one return is enough’. The company would still have to
supply the figures HMRC needs to agree the tax assessment. The HMRC computer
would then be programmed to send on all the figures that were needed for
publication through Companies House from the company’s own return to HMRC.
The task could be made easier for both HMRC and the companies concerned by
the publication of an online standard format of reporting turnover, profit and
other relevant figures.
It is difficult to see why people should object. Under the scheme, no more
information would be made public and no more information would be shown to HMRC
than at present. A company would avoid being responsible for the Companies House
Of course, the company itself would still have to notify Companies House of
changes in share structure or directors in the normal way as these occurred. The
HMRC form could contain a reminder that all relevant changes of share structure
and personnel still have to be notified as they arise.
Nor should the government object. It is true it would have to set up the
original system to send the relevant information on, but with modern computing
it would be neither difficult nor expensive.
A long time ago, Companies House set up a shuttle document with my
encouragement, to remind companies annually of what they had filed about their
structure and could send back a nil change return easily as a result. This
addition would take care of the ever changing figures for activity and profit.
The Rt Hon John Redwood is MP for Wokingham and leader of the
Conservative policy group on economic competitiveness
Stuff and nonsense
With this announcement, it seems the Conservative Party is attempting to make
proposals that support the notion of reducing the administrative burden on SMEs.
While this should be encouraged, they are sadly misguided if they think that
a single declaration of company results will satisfy all needs.
Killing two birds with one stone is never that simple.One of the most
fundamental reasons why this will not work inpractice is that the filing
requirementsfor smaller companies at Companies House are much less than the
requirements of HM Revenue & Customs.
While full accounts are submitted to HMRC for all companies, small companies
are only required to submit abbreviated accounts to Companies House.
The most notable of thesedifferences is that small companies (that meet two
of the following criteria: an annual turnover of £5.6m or less, a balance sheet
total of £2.8m or less and the average number of employees 50 or fewer) only
submit an abbreviated balance sheet and notes without any profit and loss
information at all.
The only way that a single declaration would work is if HMRC reduced the
amount of information that it requires from all companies, or if small companies
were required to make more information publicly available through Companies
House, thus defeating the object of the exercise. Both options seem unlikely,
with the latter simply being commercially unacceptable.
While this proposal is impractical, it does raise important points. Itis a
sad fact that UK companiesare already required to place more information than
many other European countries on public file,while small companies in the US do
not need to file any information publicly at all.
Perhaps the Conservatives would gain more favour with small businesses by
looking at these facts rather than making proposals that make a complex system
even more so.
Mark Saunders is a partner at Wilder Coe Chartered Accountants
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