Small firms accounts exemption condemned as 'utterly absurd'

EU plans to exempt Europe's smallest businesses from filing annual accounts have been slammed by a credit expert.

Earlier this week, members of the EU Parliament voted in favour of removing from micro-firms the requirement to submit accounts on a yearly basis. Micro businesses, which make up 75% of all EU companies, are those with less than €500,000 on their balance sheet, a net turnover of less than €1m, and employing an average of 10 people or less.

The vote was welcomed by many with Diana Wallis, MEP for Yorkshire and Humber, describing the removal of red tape as "a ray of light for small businesses at a very difficult time". 

But Philip King, chief executive of the Institute of Credit Management, today slammed the decision calling it "utterly absurd".

Criticising the argument that the change will help businesses grow as "peverse", King said: "It will have exactly the opposite effect. Less information means less credit will be extended, and as a consequence, growth will be impaired rather than encouraged."

King added that the accounting exemptions already extended to SMEs do nothing to help facilitate trade, and that the latest plans will make a difficult situation worse.

"While it is laudable to want to help small businesses, this is not the way to do it. If the last 12 months have taught us anything, it is that businesses must provide more information for credit to be extended, not less," he commented.

Despite the favourable vote, the British government is not obliged to adopt the proposal.

www.businesszone.co.uk

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