Accounting and Reporting standards from 1 January 2021

The Department for Business, Energy and Industrial Strategy (BEIS) and the Financial Reporting Council (FRC) have jointly published a letter to the accounting and audit sectors setting out the UK’s legal framework for accounting and corporate reporting at the end of the transition period on 31 December 2020.

The information in the letter is particularly relevant for UK incorporated companies, multinational groups with a UK and EEA presence and UK and EEA companies with cross-border listings. It is important to note that for the vast majority of companies the UK’s accounting and corporate reporting regime will remain largely unchanged

The main changes to corporate reporting are as follows:

• All UK incorporated companies that are currently required to use EU-adopted International Financial Reporting Standards (IFRS) will need to use UK-adopted international accounting standards for financial years that begin on or after 1 January 2021. On 1 January 2021, UK-adopted international accounting standards and EU adopted IFRS will be identical.
• Companies with financial years ending on 31 December 2020, can continue to use EU adopted IFRS as it stands at the end of the transition period for the 2020 financial year, and UK-adopted international accounting standards for the next financial year.
• Where new or amended IFRS are adopted by the UK after the transition period, but before those companies file their accounts for the financial years that straddle the end of the transition period, they can choose to apply any new IFRS adopted by the UK in addition to EU-adopted IFRS as they exist at the end of the transition period.