Annual Company Accounts
Contractors will no longer have to file full annual company accounts.
New EU Directive will relieve the burden on IT Contractors if they are below the following thresholds.
1. A Balance Sheet total of £350,000
2. Turnover of £700,000
3. An average of 10 employees during the year
Indeed they will only have to be under two of these to qualify as a micro company.
It will free IT Contractors from a lot of obligations.
The term ‘micro company‘ is a new term which will be used for companies that are below the above thresholds.
The UK Government approves of this EU Directive and will be seeking to put it into law as soon as they can.
It looks as if that could be as early as the Budget on March 21st when plans will be announced on putting it into practice.
All IT Contractors would have to produce annually then would be:-
1. A simplified trading statement to replace the profits and loss account
2. A statement of position
3. A simplified annual return
Whilst that sounds good news for IT Contractors it doesn‘t sound good news for Accountants in the industry as it seems as if contractors can do this themselves without the need of an accountant.
If this is true it will be a massive blow to the IT Accountancy industry and to Accountants in general – especially to those dealing mainly with micro businesses which the vast majority of IT Contractors are.
There can‘t be too many IT Contractors earning over £700,000 a year (more than £600K) and employing more than 10 employees.
However, IT Contractors will be delighted that an administrative burden has been taken away from them which should enable them to save costs by doing their own accounts – or at least getting them done more cheaply.
The first company to create a software package that will enable them to do their accounts easily will do very well – unless, of course, HMRC allow create one themselves to allow contractors to do it online.
So, it’s good news about the annual company accounts for contractors.