The DTI plans to increase the threshold for small businesses from 1m turnover to 5.6m. It estimates that the measures will save businesses 94m a year.

An accounting source said that an audit for a small company would typically cost from 10,000-15,000.

The DTI will also up its classification of small- and medium-sized companies in a bid to allow more to get tax breaks on plant and machinery, as well as information and communication technology.

For these purposes small companies will be defined as having a turnover of up to 5.6m, from 2.8m, while medium-sized businesses will go from 11.2m turnover to a maximum 22.8m. The new thresholds and classifications will come into force in January.

The BPIF broadly welcomed the audit proposals, which will bring the UK into line with auditing thresholds in Europe.

Public affairs officer Laura Jackson said: It will be welcomed by the industry, but this is also an unknown quantity because some lenders like to see audits, so some companies may voluntarily undertake them.

National Print Database partner Steve Mepham also welcomed the easing of the regulatory burden on businesses: There will still be [company] ratings, legal and net worth information available. I dont think that it will affect peoples ability to make sound credit judgements, said Mepham.

Company benefits
A further 69,000 UK companies will be exempt from having their accounts audited
The government estimates that the increase will save companies 94m a year
For tax breaks small companies will have turnover of up to 5.6m, up from 2.8m, while medium-sized companies will have turnover of up to 22.8m, up from 11.2m
The new classifications will apply from January

Story by John Davies