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We comment on the BEIS consultation on corporate transparency and register reform

  • Deloitte FRC letters Image

05 Feb 2021

We have published our comment letter on the Department for Business, Energy and Industrial Strategy (BEIS) consultation on corporate transparency and register reform.

We support the proposals related to the streamlining of filing of financial information. There are clear potential efficiencies to be gained through the transformative use of technology, and we are supportive of the move towards digital corporate reporting in the UK. We note that the proposals in this paper overlap in several instances with broader considerations raised in the Financial Reporting Council’s (FRC’s) recent discussion paper on the Future of Corporate Reporting. There is also overlap with HMRC’s current consultation regarding Making Tax Digital (MTD) for corporation tax in the context of digital filing of financial information. We believe it is essential for BEIS to liaise with both HMRC and the FRC in this regard, especially with regard to proposals for streamlined digital filing and continued use of size thresholds. In particular this represents an opportunity to simplify the existing size regime and to consider whether the information currently filed meets the needs of stakeholders.

However, we have significant concerns around the proposal to shorten filing deadlines to three months for public companies. A three-month deadline for public companies would create considerable practical and logistical challenges given the substantial amount of work required to prepare, have audited and approve a public company annual report. It seems unlikely that a shorter filing deadline would improve the quality of reporting and could in fact result in poorer quality if processes are condensed into a tighter timeframe. We consider that four months would be more acceptable, consistent with the requirements of Chapter 4 of the Financial Conduct Authority (FCA)’s Disclosure Guidance and Transparency Rules (DTR).

We also believe that any shorter filing deadline should apply only to those companies in the public interest, rather than to all public limited companies, and recommend that this be aligned to the outcome of the forthcoming government consultation on the definition of a Public Interest Entity (PIE).

Finally, given both the timing and the short duration of the consultation period, we are concerned that businesses may not have the opportunity to respond and recommend that BEIS seek further feedback before implementing any of the changes proposed.

The full response is contained within the full comment letter.

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