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FRC calls for transparent disclosure of tax risks in corporate reports

  • FRC (United Kingdom Financial Reporting Council) Image

Dec 01, 2015

On December 1, 2015, the UK Financial Reporting Council (FRC) announced that it will carry out a thematic review of tax reporting by a number of FTSE 350 companies to encourage more transparent recording of the relationship between companies’ tax charges and accounting profit.

A number of FTSE 350 companies will be contacted prior to their year-end informing them that the FRC’s Corporate Reporting Review Team will review the tax disclosures in their next published reports. The FRC highlights that the aim of its monitoring activity “is to drive continuous improvements in the quality of corporate reporting”.

The FRC will place a particular focus on:

  • the transparency of tax reconciliation disclosures and how well the sustainability of the effective tax rate is conveyed; and
  • uncertainties relating to tax liabilities (and assets) where the value at risk in the short term is not identified.

The FRC indicate that its review “will consider the totality of the companies’ reporting including relevant disclosures in the strategic and other narrative reports as well as the detailed accounting disclosures”.

The press release is available on the FRC website.

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