A number of changes resulting from the UK’s withdrawal from the EU take effect for the first time for UK companies for financial years beginning on or after 1 January 2021 and are therefore effective for the first time for 31 December 2021 year-ends onwards.  These changes, which are expanded upon in our comprehensive Closing Out 2021 publication, affect:

• the exemption from audit (and, if a dormant company, from preparing and filing accounts) for subsidiaries whose liabilities are guaranteed by a parent.
• the exemptions from preparation of group accounts on the grounds of consolidation into a larger group.
• non-financial information statement requirements for large PIEs within their strategic report.
• availability of some exemptions such as adoption of the small companies regime (s384 of the Companies Act 2006), the consolidation exemption for small groups (s399), and exemptions for medium-sized companies (s467).

Additionally for periods beginning on or after 1 January 2021, UK companies required or choosing to apply IFRS Standards must comply with UK-adopted IFRS Standards. UK-adopted IFRS Standards comprise IFRS Standards as endorsed by the EU as at 31 December 2020 and any standards or amendments that have been endorsed by the UK Endorsement Board after that date. 

As a result of the UK's exit from the EU, the FRC has issued updates to FRSs 100-105 for changes in legislation.  The Amendments were limited to those necessary to ensure consistency with UK company law and largely updated legal references and terminology used in the standards. Early application was permitted for UK entities in certain circumstances  

Investor and FRC expectations in annual reports

The significant uncertainties in relation to the UK’s future relationship with the EU and the terms of any future economic partnership agreement continue to persist. Investors look for transparent information on how the uncertainties arising from the ongoing UK-EU negotiation affect the company, including its ability to continue as a going concern and its longer-term viability and prospects.  Company reports should explain company-specific risks and uncertainties arising as a result of Brexit. This should include the impacts on different parts of the business and any effects on the financial statements including major sources of estimation uncertainty, amounts at risk and ranges of potential outcomes.

This page includes all of our news resources on the financial reporting implications of Brexit.