Deregulatory changes introduced for LLPs and qualifying partnerships and related amendments made to FRS 105

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17 May, 2016

The Limited Liability Partnerships, Partnerships and Groups (Accounts and Audit) Regulations 2016 SI 2016/575 (“the Regulations”) have been written into UK law, implementing deregulatory changes for LLPs and qualifying partnerships. The FRC has also made consequential amendments to FRS 105.

The EU Accounting Directive 2013/34/EU (“the EU Directive”) became part of EU law on 26 June 2013 and, following a consultation by the Department for Business, Innovation and Skills (BIS), regulations were made (the Companies, Partnerships and Groups (Accounts and Report) Regulations 2015) which implemented the EU Accounting Directive for limited companies and qualifying partnerships. Changes were also made by the Financial Reporting Council (FRC) to UK accounting standards in July 2015 to implement those changes.

Subsequently, the Government consulted separately on equivalent changes for LLPs and on extending the micro-companies regime to qualifying partnerships. Following the responses received to the consultation, the Government announced it would introduce a number of key changes for LLPs and qualifying partnerships.  Following on from this, the Regulations have now been made.

The Regulations come into force on 18 May 2016. The majority of amendments introduced apply for financial years beginning on or after 1 January 2016 with early adoption permissible for financial years beginning on or after 1 January 2015. However:

  • the increase in size limits for audit exemption purposes cannot be early adopted and only applies for financial years commencing on or after 1 January 2016; and
  • the Regulations require that a full list of subsidiaries and other related undertakings be provided in the notes to the financial statements of an LLP, replacing the previous option to include only a list of principal subsidiaries and file the full list with the annual return. This requirement applies for annual reports of an LLP approved on or after 1 July 2016. Our ‘A Closer Look’ newsletter covered the equivalent changes for companies and qualifying partnerships which applied from 1 July 2015.

As the Regulations extend the ability to prepare accounts under the micro-entities regime to qualifying partnerships and LLPs, the FRC has also amended FRS 105 to deal with such partnerships.

Click here to access the new Regulations on the BIS website.  The FRC's press release and amendments to FRS 105, as well as an impact assessment of the changes, can also be obtained from their website.  Our Need to know publication can be accessed here.

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