Co-operatives UK welcomes the announcement in today's Budget (8 March) of the removal of red tape for smaller co-operatives, helping to put them on a level playing field with other business forms.
Government has used the Budget to announce a raising in the threshold at which co-operative and community benefit societies are forced to conduct a full professional audit, from £5.6 million in turnover and £2.8 million in assets, to £10.2 million in turnover and £5.1 million in assets.
In response to calls from many of our members, Co-operatives UK has successfully lobbied for this over the last year.
We estimate that this measure will save societies between £5,000 and £10,000 a year in extra audit fees, which companies don't have to pay, putting them on a more even playing field.
“It is very welcome to see the Chancellor helping to level the playing field for smaller co-operative businesses. There are 7,000 co-ops up and down the country giving people ownership of the things that matter - their work, their homes, their local areas. This reform will make life easier and provide a significant saving for a range of co-ops.” Ed Mayo, Secretary General, Co-operatives UK
The change is announced in paragraph 5.10 of the Budget document.
How and when will it happen?
It will happen through 'secondary legislation' and will update Section 84 of the Co-operative and Community Benefit Societies Act.
Note this change will not affect credit unions or registered social landlords.
Following discussions with HM Treasury we know a technical consultation will come in due course. We have been asked to help ensure the sector understands this change and will work with affected members in the months ahead. The 'statutory instrument' is expected to be laid before Parliament later this year, and will be subject to scrutiny by committee, though this is most unlikely to lead to any problems. We anticipate the new higher threshold could come into force from January 2018.
What about the auditors' report requirement?
Co-operatives UK has also been pressing for significant changes to the 'auditors' report' requirement for societies with a turnover over £90,000, which we know is most irksome. While HM Treasury officials agreed that changes were required, they took the view that this required primary legislation, which is simply not an option in their department at present. We will keep at this though, because it's a burden that needs to be dealt with. Crucially, members can still choose to conduct a full audit if they wish - this is an optional exemption for the audit requirement.
This core policy win demonstrates the value of co-ops coming together to lobby government. Thank you for supporting our policy work through membership of Co-operatives UK.
For more details contact [email protected].