Government plans to take a hatchet to a key part of small business bureaucracy have been hailed by retailers.

As part of the plans, which could save 42,000 businesses £40m per year, medium-sized business owners could be released from their requirements to have accounts independently audited, while small business owners, with less than 10 employees, could be exempt from the requirement to produce two sets of accounts.

Speaking at the trade and industry dinner, business secretary Vince Cable said the burden of regulation was a key barrier to growth.

“From the long-standing retailer who estimates that he spends 10 times longer on form filling than 20 years ago, to the care worker who was asked to train as a taxi driver in order to be allowed to drive the people in her care into town, we have to find a way of ensuring that small business is not handicapped by tiresome form filling,” he said.

“The UK’s 4.8m small and medium-sized enterprises are vital to the economy. They provide 60% of private sector jobs and account for half of all private sector turnover. The government is committed to ensuring that the UK has an environment where it is easier for new companies and innovations to flourish and where people who aspire to be entrepreneurs are encouraged."

The government will amend the Companies Act to bring small company audit rules in line with the EU minimum in 2012.

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