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HMRC publishes paper on the tax implications of FRS 105

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21 Jul 2017

HM Revenue and Customs has published a paper which provides an overview of the key accounting changes and the key tax considerations of moving from the Financial Reporting Standard for Smaller Entities (FRSSE) or ‘old’ UK GAAP to FRS 105 ‘The Financial Reporting Standard applicable to the Micro-entities Regime’.

The FRS 105 paper follows similar papers prepared by HMRC for companies transitioning 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.  HMRC, in December 2016, also published an additional overview paper on key income tax considerations of moving from ‘old’ UK GAAP to FRS 102.

The paper is split into two sections:

  • The first section provides a comparison of the accounting and tax differences between ‘old’ UK GAAP, the FRSSE and FRS 105.
  • The second section provides a summary of the key accounting and tax considerations upon transition from ‘old UK GAAP’ or the FRSSE to FRS 105.

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”.

For accounting periods beginning on or after 1 January 2016 smaller and micro companies can no longer follow the FRSSE.  Such entities will either have to follow the recognition and measurement requirements of FRS 102 and the presentation and disclosure requirements within Section 1A Small Entities or apply FRS 105.

The FRS 105 overview paper is available on the HMRC website. 

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