UK faces legal action over transparency

The UK government is being threatened with legal action by the European Commission for failing to comply with legislation forcing companies receiving public subsidies to account separately for that part of their work.

The law is the transparency directive (2005/81/EC) - supposed to have been written into the Statute Book by December 2006. Brussels says Britain has not fully implemented the law, and has given the government two months to say how it will comply or maybe face a European Court of Justice case.

Brussels officials speaking to Accountancy Age revealed 'what the UK has not implemented in its legislation are the provisions which impose an obligation on all undertakings to keep separate accounts [for when they] they receive public service compensation and also carry out other commercial activities.' The law’s goal is to ease Brussels’ competition directorate general assessments on whether such subsidies are legal under EU state aid rules.

EU competition Commissioner Neelie Kroes said: 'The UK and Belgium are the only member states that have not complied with their financial transparency obligations and they must do so promptly.'

A UK department for business, innovation and skills spokesman said officials were currently drafting a statutory instrument based on the directive for ministerial approval – then parliament’s.