EU Law
For guidance on the UK's withdrawal from the European Union see our dedicated page.
Under the European Union (Withdrawal) Act 2018 (EUWA 2018), the UK ceased to be a member of the European Union (EU) on 31 January 2020 (‘exit day’). Under the withdrawal agreement, enacted in UK law by the European Union (Withdrawal Agreement) Act 2020 (the WAA 2020), this was followed by an implementation period (IP), which ended on ‘IP completion day’, defined as 31 December 2020 at 11.00 p.m. UK time.
The effect of the EUWA 2018 and the WAA 2020 when taken together is that:
- UK laws passed prior to IP completion day to implement EU Directives (described in EUWA 2018 as "EU-derived domestic legislation") will continue to remain part of UK law, notwithstanding that the European Communities Act 1972 which was used to implement them has now been repealed. Examples include the regulations made to implement the EU Accounting Directive and Audit Directive.
- Those EU laws that previously applied directly in the UK (EU regulations, decisions, tertiary legislation and the Annexes and Protocol 1 to the EEA Agreement) form "retained direct EU law". Examples include the EU Audit Regulation.
The EUWA 2018 gave the UK government the power to amend or repeal both EU-derived domestic legislation and retained direct EU law if it was necessary to do so to make UK law function as intended once the UK has exited the EU and EU law ceases to apply in the UK. The government has made a number of statutory instruments which address the UK accounting, corporate reporting, auditing and corporate governance regimes. These instruments amend retained direct EU law and EU-derived domestic legislation to address deficiencies and ensure that the law continues to operate effectively after IP completion day. They took effect from IP completion day, although in many cases transitional provisions exist such that changes took effect only for periods beginning on or after IP completion day.
From ‘Implementation Period (IP) completion day’, defined as 31 December 2020 at 11.00 p.m. UK time, the IAS Regulation was repealed so it no longer applies to the UK. Instead, the regulations introduces a new legal term - ‘UK-adopted international accounting standards’ - for IFRS Accounting Standards as adopted by the UK. This is discussed further in the IFRS in the UK page.
New legislation also provides for a UK mechanism for the endorsement of IFRS Accounting Standards. IFRS Accounting Standards as adopted by the UK on IP completion day are the extant IFRS Accounting Standards as adopted by the EU immediately before IP completion day, but may diverge over time; the timing of UK endorsement of standards may also be different from EU endorsement. This is discussed further in the IFRS in the UK page.
The Transparency obligations directive
The requirements of the EU Transparency Obligations Directive were transposed directly into UK law via the Disclosure Guidance and Transparency Rules (DTR). From 1 January 2021, all companies admitted to trading on a UK regulated market must comply with the requirements on periodic financial reporting in Chapter 4 of the DTR (regardless of country of incorporation). The DTR represent EU-derived domestic legislation which remains in place after IP completion day, with some changes to ensure that they continue to function. Further information on the Disclosure Guidance and Transparency Rules can be found here.
