UK Corporate Reporting – Navigating your First Steps in the UK
When expanding into the UK, you will understandably have a lot of decisions to make and steps to take during your first period of trading. One of the important topics to address is your corporate reporting requirements and, if it is your first time trading in the UK, this process needs careful navigation.
What are the filing requirements?
A UK company is required to file financial statements with the UK Company Registrar, Companies House. Financial statements must be filed annually and you have nine months after your UK entity’s year end to file them.
These financial statements, as well as other information on the Company, are then publicly available online. This means what is disclosed in your financial statements is important, as you will have to consider that potentially sensitive information may be publicly accessible.
When preparing financial statements, you will need to comply with two main frameworks - Companies Act 2006 (UK company law) and your chosen accounting framework.
Why is the accounting framework important?
Whilst the Companies Act 2006 is going to drive your audit requirement, directors’ duties and some disclosure requirements, it’s your accounting framework that will impact the way you treat your transactions and will have the biggest impact on your year end results.
You have two main options to choose from in relation to your accounting standards - Financial Reporting Standard 102 (UK GAAP) or International Financial Reporting Standards.
It is important to consider which accounting framework to adopt, with divergences in their treatment and disclosure of certain financial statement areas. For example, if your UK company will be part of a US GAAP consolidation, then there may be some important comparisons.
For a summary of the key differences, read our info sheet here.
What do I need to know about disclosures?
Once you have decided on the best accounting framework for your business, you then need to find the most efficient financial statement disclosure format. Under each accounting framework, you have options you can review.
Under IFRS for example (should you meet certain criteria) you might qualify for Financial Reporting Standard 101. This would offer a reduced disclosure option that would potentially enable you to file only a balance sheet and a few footnotes (depending on your specific requirements).
Similarly, under FRS 102 section 1A, you may also qualify for a reduced disclosure approach to preparing your financial statements.
For a summary of the key differences between the frameworks, read our UK vs IFRS – Disclosure Considerations Info Sheet here.
Do I need a UK Audit?
Once you have prepared your financial statements in accordance with the requirements of the accounting standards and disclosure frameworks above, you must consider whether you face an audit requirement under Companies Act 2006.
If you are expanding an established business into the UK from abroad, you must be careful with this consideration. UK audit requirements are driven by prescribed thresholds which are applied to consolidated, worldwide results. Therefore, despite it being your first year in the UK, you may still be within requirements.
You can read about the UK audit thresholds in our Info Sheet here.
If you are thinking of incorporating or acquiring a UK entity, or already have one, and would like to discuss your UK corporate reporting obligations, then get in contact and we will be happy to help.