More than a million small businesses are exempt from audit, which is leading to individual savings of thousands of pounds per year, finds a study by the Department for Business, Energy and Industrial Strategy.
The poll of 400 businesses affected by the audit changes finds that three out of four SMEs undergoing audits feel they would benefit from exemptions, while 80 per cent of firms strongly agree that taking up audit exemptions helps reduce burdens for small businesses.
Newly-eligible SMEs that were polled overwhelmingly feel they had benefited from the changes, saying they have saved money and time because of the reforms.
However, the research also shows that despite the success of the rule changes, only 30 per cent of newly-eligible SMEs are currently taking advantage of audit exemptions.
Business minister Margot James says the government is committed to making the UK the best place in Europe to start and grow a business, which means supporting SMEs and removing unnecessary burdens to their growth, including by reducing regulation.
‘By increasing the number of businesses exempt from audit, more SMEs are now able to reinvest in their businesses, increase cash flow and repay debts as a result of exemption take-up,’ she adds.
‘The number of businesses saving money from the new audit exemptions is already huge and I would encourage those who haven’t signed up to do so as soon as possible.’
Since restructuring the small companies audit exemption in 2012, companies and Limited Liability Partnerships have not been required by law to undergo audits if they meet just two of the following criteria: fewer than 50 employees; an annual turnover of no more than a maximum amount (now £10.2 million), and assets worth no more than a maximum (now £5.1 million).
This replaced previous rules where often all three criteria had to be met.
There are a record 5.5 million small businesses across the country, responsible for around half of all private sector employment.