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Government to extend the small company threshold?

The UK government has announced an extension of the definition of small business for regulatory purposes, from less than 50 employees to those with less than (up to) 500 employees.

This threshold change applies from Monday 3 October to all new regulations under development, and to those under current and future review. The government intends to consult on extending the threshold to businesses with 1,000 employees in the future. It is however unclear what this actually means, and detailed guidance is yet to supplied.

In an ICAEW article (here: https://bit.ly/3TvV6cG), Nigel Sleigh-Johnson, ICAEW’s Director, Audit and Corporate Reporting says “With this in mind, we have a number of questions and concerns about the announcement. This includes clarification of any impact on the thresholds that currently determine the reporting and audit obligations of small and medium-sized companies, and the timing of any changes. Clarity is needed as soon as possible to prevent any uncertainty and confusion in the market.

Currently no such clarification has been made available. So, what does this mean for the small company (and group) size and audit thresholds? Good question! Currently it would seem there is no change as the current Companies Act is not “new regulation under development” nor “under current review”; also the government’s website still defines a small company (and the audit threshold) as being based on the average number of employees being not more than 50.

Therefore it is HAT’s current view that the thresholds used in our “Entitlement to audit exemption” and “Entitlement to small company exemptions” remain unchanged (still less than 50 employees), pending any further clarification from BEIS and ICAEW/ACCA.

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