Byers lifts audit burden from 225,000 smaller companies

Up to 225,000 small and medium sized businesses will be spared the burden of a statutory annual audit, at a cost saving of more than £200m a year, Stephen Byers announced yesterday.

The Secretary of State for Trade and Industry said the minimum turnover above which a full audit would be required will be lifted from the current level of £350,000 to £4.8m. This level, the maximum allowed under EU law, will be reached in two stages, with an interim limit of £1m applied from 31 July. "This will bring the benefits to the majority of small companies as soon as possible this year," Mr Byers said.

The first stage will relieve 150,000 companies of the burden of a statutory audit. An additional 75,000 businesses will be exempted when the threshold is lifted to the £4.8m maximum following the final recommendations of the company law review. Mr Byers said he would take their recommendations into account before deciding what statutory requirements should replace the full audit for companies in the £1m-£4.8m size range.

He also announced a simplification of the law on dormant companies, lifting the requirement that they must pass a special resolution each year to gain exemption from audit.