ICAEW Urges UK Government To Re-Examine SME Laws

by Robin Pilgrim, LawAndTax-News.com, London

28 October 2003

The Institute of Chartered Accountants in England and Wales (ICAEW) last week released a policy paper urging the UK government to review all legislation pertaining to small and medium-sized enterprises (SMEs), and to establish an independent standing commission to consult on issues important to the sector, and make recommendations to the Prime Minister.

The paper, entitled 'Entrepreneurship: The Key to Growing the SME Sector' argued that the 'think small first' principle espoused by the government during its Company Law Review needs to be applied to all legislation affecting SMEs, not just to company law.

When the results of the Review are finally enacted, company law in the UK will be redrafted with smaller enterprises in mind, with supplementary proposals for larger entities to be included. However, the government has not yet found time to put this new model into practice, a situation which the ICAEW described last week as "highly regrettable".

Explaining the reasoning behind the Institute's approach to this issue, president David Illingworth announced that:

"Smaller businesses feel the weight of regulatory burdens more acutely. It can be counterproductive to bind SMEs with exactly the same rules designed for larger multi-manager businesses. Failure to take into account their needs when framing legislation, together with some heavy-handed enforcement, imposes large and growing costs on SMEs and detracts from their competitiveness."

He continued:

"We urge the government to consider conducting a rolling review of existing rules affecting smaller businesses. The appointment of an independent commission would help ensure that recommendations for repeal of, or amendment to, existing rules are based on proper consultation with the SME sector."

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