After the government’s climb-down over proposed changes to mid-market accounts, many firms may have breathed a sigh of relief. However, Pali Banwait, CEO and Founder at Strive Consultants, argues that the move might reflect an administration which is out of touch with SME needs in the first place.
New Companies House rules were set to see small and medium-sized enterprises (SMEs) lose the right to abridged accounts from Spring 2027. But just days after being announced, the government shared that this latest implementation of the Economic Crime and Corporate Transparency Act was to be scrapped.
While the decision to abandon the rules may suggest that entrepreneurs’ concerns are being heard, the introduction of the new system calls into question whether the government truly understands the needs of the SMEs. This U-turn reflects the volatile conditions endured by small business owners in the UK – a factor that’s driving thousands to leave the country and set up their operations abroad. And with its clear, consistent policy environment and strong focus on innovation, Dubai is increasingly seen as a destination where entrepreneurs can plan for long-term growth with confidence.
Removed from the SME reality
For small companies, defined as those with a maximum turnover of £15 million, balance sheets of £7.5 million or less, and a headcount of fewer than 50 staff, the rules were established with a view to increasing corporate transparency and tackling economic crime.
Instead of sharing abridged accounts, the new rules would have waived the long-standing exemptions for SMEs, requiring them to start sharing profit and loss (P&L) statements. Not only would the change have meant SMEs would incur the cost of expensive accounting software, but by disclosing full accounts, they risked greater scrutiny from competitors and the public. These onerous filing changes were met with immediate criticism from industry, with the rules requiring the sharing of P&L likely becoming a major deterrent for those looking to set up a company in the future. The decision appeared to lack understanding of the complicated reality of starting a company in the UK. While attempting to support SMEs, the government would be inadvertently restricting the growth it has promised to prioritise.
A long wait for change
In last month’s industrial strategy announcement, the government shared its plan to cut administrative costs associated with regulation by 25%. The strategy detailed plans to create a regulatory system which would be easier for businesses to navigate and accelerate innovation as a result. However, in many cases, this development would require legislative change.
As UK entrepreneurs wait months or possibly years for the environment to become primed for long-term growth, in Dubai this aspiration is already a reality.
With its enhanced tax incentives, streamlined company formation practices, and fast-track visas, Dubai is quickly becoming the home of UK entrepreneurs looking to grow their companies. In the past year alone, the number of Google searches for the term ‘UAE company formation’ has increased by 43% (42.85%).
The recent news cycle has also focused on the tax advantages of relocating to the Emirate, especially in light of recent changes to the UK’s non-dom tax regime and an exodus of high-net-worth individuals. Last month, Henley and Partners found that 16,500 millionaires are set to leave the UK in 2025, with Dubai alone expected to see an estimated arrival of 9,800 millionaires. While there are ultra-high-net-worth-individuals (UHNWI) leaving the UK for tax benefits, there is also a growing number of entrepreneurs and SMEs moving too. Businesses of all sizes are looking to Dubai as a base, and thanks to the ease of relocating their operations, service sector companies such as consulting are leading this shift.
Clarity needed for long-term decisions
While the idea of a supportive business culture might seem abstract, in Dubai it is backed by government policy and investment. In 2021, the UAE removed the requirement for companies to have a local sponsor, allowing foreign investors and entrepreneurs the freedom to fully own onshore companies in most sectors. Of the 45 existing Free Zones, 30 are in Dubai, the city is also home to 90% of the UAE’s scale-ups.
The alignment of policy with the UAE’s broader national strategy for growth is evident in its schemes devoted to long-term planning. For instance, the Dubai Economic Agenda 2033 has plans to double the Emirate’s economy and attract even more talent and investment over the next decade. ‘We the UAE 2031’ Vision has a similarly ambitious outlook for the years ahead as its aims include securing the UAE’s position in the top 10 countries attracting global talent, highlighting itself as an incubator for innovators and entrepreneurs.
Dubai continues to deliver on its promise to entrepreneurs and SMEs, offering a stable environment where long-term growth is not only possible but actively supported. With pro-business policies, strategic investment, and a clear vision for the future, the city is a global hub for founders, especially in the consulting sector.
While the UK government may have avoided further backlash by revising the filing rules, the message sent to SMEs is that U-turns, red-tape, and long wait times for legislative changes will be par for the course when building a business in the country.