The vast majority of SME's in the UK are owner managed businesses. The stakeholders are typically just one or two people (ie husband and wife) or may extend to a small handful of individuals who are typically involved in the business on a day to day basis.
The current system of assessing a business upon things like turnover, asset value, and numbers of people employed are irrelevant where there is not a large or public shareholder subscription.
A financial audit is an expensive process itself. Additionally, audits typically require assets to be independently valued and revalued and revalued and revalued time-after-time by expensive consultants, therefore incurring extensive additional costs and administrative burden. Additionally, the manner in which auditor firms apply the FRS and SSAP standards in this day and age is so totally over the top as to be laughable if it were not so serious a subject.
The final objective of an audit and it's associated valuations and standards and activities is to report to the Directors and Shareholders of the SME, who typically are the very people who know most about the business in the first place, and is therefore a pointless and burdensome process/exercise.
Annual Returns, File Accounts & Public Accounts:-
What good purpose do any of these achieve???? Non as far as I can see.
In my opinion, a "Private Limited Company" should be just that. The ownership and finacial details/information of a private limited company should extend no further than the Directors, Shareholders, HMRC, the Accountants acting for the business and the Businesses' Bankers.
By implementing these suggestions, SME's would be released from pointless administrative burdens and unnecessary costs. Proper standards of record keeping would still be required in order to satisfy HMRC requirements, but those records and associated information would be effectively 'private' and only extend to the stakeholders and officers directly concerned. Additionally, there would likely be savings for the government in HMRC and in Companies House due to the simplified nature of the system.