With the UK having officially left the European Union (EU), many businesses will need to update accounting and reporting practices to remain compliant with the UK’s new standards.
With more clarity around the terms of the Brexit deal, there are a number of changes that business leaders will need to ensure are integrated into their accounting and reporting processes.
This includes new, independent reporting standards, as well as changes to the VAT rules and procedures for businesses which transact with EU member states.
Three things you can do to make sure you’re compliant with accounting and reporting requirements
(1) Appoint a UK based audit firm
If your business is registered in the UK, you will need to appoint a UK-registered audit firm, if you have not already. This auditor will sign the audit report on behalf of your organisation.
If you need to find a new auditor, try the Register of Statutory Auditors – you can search by firm, location or by Recognised Supervisory Body (RSB) to find one that suits your needs.
- The government offers guidance on what to do when it comes to reporting your accounts
- The Department for Business, Energy & Industrial Strategy also offers support via email for any questions in the interim
- The Financial Reporting Council (FRC) has published a letter outlining changes to the accounting and reporting frameworks that you must now comply with as the UK operates outside of EU law
(2) Update your business accounting standards
The 2006 Companies Act requires that UK companies prepare annual accounts in accordance with International Accounting Standards that have been endorsed by the EU (EU-adopted IFRS), or in accordance with UK Generally Accepted Accounting Practice (UK GAAP) standards. If your business is currently required to use EU-adopted IFRS, you will need to use UK-adopted international accounting standards for financial years that begin on or after 1 January 2021. You can continue to use EU-adopted IFRS when preparing your accounts for financial years beginning before 1 January 2021.
The government is establishing a UK Endorsement Board (UKEB) to endorse and adopt new or amended IFRS into the body of UK-adopted international accounting standards now the transition period has come to an end. It will also be required to contribute to the development of a single set of international accounting standards in 2021, when more information will be available.
- The government has an overview of the UK Endorsement Board and details on transition timelines
- Deloitte offers a useful overview of the financial reporting framework in the UK
(3) Prepare to account for changes to VAT
Now the transition period has come to an end, there are some specific changes to VAT that may affect your business – particularly relating to procedures for transactions between the UK and EU member states.
The changes depend on the type of products or services you are trading, whether you are completing customs declarations and the value of your transactions. These changes came into effect from 1 January 2021.