Posted: Monday, 4 March 2013 @ 13:50
The government came to power in 2010 promising to get rid of unnecessary red tape, or at least not to increase it through its ‘one in one out’ policy. The Department for Business Innovation and Skills (BIS) invited business leaders to tell them what regulations they wanted scrapped as part of its Company and Commercial Law Red Tape Challenge.
My hopes of soon seeing business freed from the binds of excessive red tape were soon disappointed. Instead of taking decisive action, the government embarked on an unbelievably slow consultation process. It seemed obvious to me that BIS hadn’t appreciated the impact that excessive red tape has on small and medium sized businesses. The cost and time involved in compliance with regulations is proportionately greater the smaller the organisation and, when it comes to SMEs, directors are spending a significant amount of their time dealing with red tape rather than in growing their business. At a time when the country needs SMEs to prosper to bring an end to the flat lining of the economy, the matter of red tape is urgent.
Well, there has been a development, of sorts. On 27th February 2013, Jo Swinson, the Business Minister, announced the interim results of the Company and Commercial Law Red Tape Challenge. Apparently, 57 of 115 regulations affecting the day-to-day running of businesses and the preparing and filing of their accounts are to be scrapped, merged or simplified. Great, but why has it taken 3 years just to identify them and how long must we wait for them to be implemented?
At the same time, the government announced that it would amend the Companies Act to:-
- Remove certain names from the list of 161 names that cannot be registered without specific approval.
- Simplify the regulations concerning the need to display company names at its registered office, other business premises, on paper and online. The proposal will put all the rules in one place.
- Reduce the accounts filing requirements of companies with less than 10 employees. They will be able to file “much reduced annual accounts”, with shortened balance sheets and profit and loss accounts, with the current exemptions from filing profit and loss accounts continuing.
- Simplify the system for companies to use assets to raise finance; streamline company annual reporting requirements; and repeal certain filing obligations when companies change their auditors.
All these changes are very much welcomed but my concern is the amount of time it has taken to reach these conclusions and the amount of time required before they can be implemented. These are, after all, only ‘interim results'.
In the meantime, it seems that its business as usual and directors of SMEs will still need to spend a great deal of time and money on dealing with regulations rather than on real business.
Blog by Gary Cousins
Gary has been providing legal advice to shareholders, directors and business owners for over 25 years. Specialising in dispute resolution Gary is based in Birmingham with clients throughout the UK and overseas. View profile
This blog is not intended to constitute legal advice, nor is it intended to be a complete and authoritative statement of the law, and what we say might be out of date by the time you read it. You should always seek legal advice to confirm whether or how any information in this article applies to your particular situation. We offer a free telephone consultation
to discuss your particular circumstances.