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HMRC updates its papers on the tax implications of FRS 101 and FRS 102

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12 Aug 2016

HM Revenue and Customs (HMRC) has updated its papers which provide an overview of the key accounting changes and the key tax considerations of moving from ‘old’ UK GAAP to either FRS 101 ‘Reduced Disclosure Framework’ or FRS 102 ‘The financial reporting standard applicable in the UK and the Republic of Ireland’.

The FRS 101 paper updates a previous paper published in January 2014 to primarily to reflect:

  • additional commentary in relation to non-interest bearing loans
  • updated commentary on the application of the Disregard Regulations and Change of Accounting Practice Regulations, reflecting the changes made to these statutory instruments in December 2014
  • updated accounting commentary to reflect a number of the amendments to FRS 101 issued in September 2015

The paper does not reflect:

  • FRS102 or FRS102 section 1A – this is provided in the separate paper as highlighted below
  • FRS103Insurance Contracts
  • FRS104Interim Financial Reporting
  • amendments to European Union (EU) endorsed International Financial Reporting Standards (IFRS), yet to be effective
  • new IFRS, yet to be EU endorsed.

The paper has also not been updated for changes to the tax rules included in Finance (No.2) Act 2015 or that are included in Finance Bill 2016. In particular, it does not reflect changes to the loan relationship and derivative contract rules and changes to the intangibles legislation.

An updated FRS 102 paper is also available on the HMRC website reflecting amendments (from a paper originally published in January 2014) that were covered in our news item in October 2015.  

Both papers are are split into two sections:

  • The first section provides a comparison of the accounting and tax differences between ‘old’ UK GAAP and either FRS 101 or FRS 102.
  • The second section provides a summary of the key accounting and tax considerations upon transition.

The papers include the requirements of the law as they stood at the date of the publication.  HMRC intend to update the papers “as further information is available and as new accounting standards and tax law develop”.     

Update 16 December 2016 - HMRC have added an additional overview paper on key income tax considerations of moving from ‘old’ UK GAAP to FRS 102.

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