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Small Firms

Volume 447: debated on Thursday 22 June 2006

To ask the Secretary of State for the Home Department what definition the Department uses of a small firm. (59272)

The Home Office does not use one single definition of a small firm. Terms such as “small firm” and “SME” (small and medium sized enterprise) are used interchangeably. Two of the most common definitions are those provided by the European Union, and the Companies Act 1985.

The European Commission definition specifies a maximum headcount, turnover, balance sheet and independence criteria to qualify as a small firm. The Companies Act 1985 states that a company is “small” if it meets at least two of the following criteria: a turnover of not more than £5.6 million; a balance sheet total of not more than £2.8 million; and not more than 50 employees. These definitions can be found at: and