New Company Reporting Thresholds
Originally sent: July 19, 2004Last November I wrote about the proposed increase in the audit threshold from ?1,000,000 to ?5,600,000 turnover. This is now very much with us, and will apply to all companies whose accounts close after 30th March 2004 (unless they extended their year after 9th January 2004).
In my earlier e-mail I discussed some ways in which you could give added value to your clients and also build your relationships with accountants in the wake of the threshold change. At the time I was just concentrating on the audit threshold. Now the change is upon us, I would like to remind you of some other implications.
The audit threshold has now been brought in line with the definition of ?Small Company? for the purpose of reporting and accounts. Strictly speaking, you will not just be looking at turnover, but will consider the three measures of turnover, balance sheet total and number of employees. In order to qualify as a ?Small Company? your client must demonstrate that it does not exceed two of the three measures. The full definition is:
Small Company Medium Company
Turnover ?5,600,000 ?22,800,000
Balance Sheet Total ?2,800,000 ?11,400,000
Employees 50 250
Any company which fits the ?Small Company? definition will not have to include a Profit and Loss account with its accounts filing. This has always been the case, but now far more companies will be able to submit abbreviated accounts ? particularly as not only have the financial thresholds doubled, but also many companies are now reporting lower profits. Be aware that, if you are relying on drawing down accounts from Companies House as part of your marketing strategy, you may shortly find it more difficult obtaining the information you need as companies begin filing using the new threshold rules.
We will continue to receive at least estimates of the turnover and profits of these companies. What is more, we offer a service where we will provide you with appointments (not simply leads) with the managing directors of companies in your target market. Please telephone John Kerr on 023 8061 1666 for further details on this amazing service. Alternatively, e-mail him at johnkerr@cadde.co.uk.
Small Companies tend to be offered greater tax concessions than larger companies. You now have an excuse to contact again all your clients and prospects with turnovers between ?2,800,000 (the old threshold) and ?5,600,000 (the new threshold). Many of these companies will be unaware of the tax benefits available.
For that matter, are you aware of those tax benefits? If not, perhaps it is time you brushed up on some of your technical knowledge. Not to pass an exam and have a nice certificate to hang on your wall, but to ensure you are ahead of the game and can continue to provide added value to your clients.
Adviser Breakthrough Training Solutions Ltd. takes no responsibility for loss occasioned by any person acting or refraining from action, or in consequence of any other person acting or refraining from action, as a result of the material in this article.
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