Introduction to new UK GAAP

By Tolley in association with Malcolm Greenbaum

The following Corporation Tax guidance note by Tolley in association with Malcolm Greenbaum provides comprehensive and up to date tax information covering:

  • Introduction to new UK GAAP
  • Background
  • Why is the new UK GAAP relevant to tax practitioners?
  • The new UK GAAP framework
  • Choosing between FRS 101 and FRS 102
  • FRS 102 ― relevant sections for the tax practitioner


In this guidance note, references to the ‘old UK generally accepted accounting practice’ or ‘old UK GAAP’ are to the combination of UK accounting principles contained in the Financial Reporting Standards (FRSs), Statements of Standard Accounting Practice (SSAP) and Urgent Issues Task Force (UITF) abstracts.

References to the ‘new UK GAAP’ are essentially to FRS 100, FRS 101, FRS 102 and FRS 105, which replaced the old UK GAAP for accounting periods beginning on or after 1 January 2015 (1 January 2016 for FRS 105).

Companies (and unincorporated businesses) previously using Financial Reporting Standard for Small-sized Entities (FRSSE) have had to adopt either FRS 102 (with small company disclosure exemptions) or FRS 105 (micro-entities) for accounting periods beginning on or after 1 January 2016.

Since 2005, companies with a listing on a regulated market in the European Economic Area (EEA) have been required to prepare their group consolidated financial statements using the International Financial Reporting Standards (IFRS). Even the issuance of listed debt on such a market requires the issuer to produce consolidated IFRS accounts. This requirement is unaffected by the introduction of the new UK GAAP.

In addition, all companies listed or otherwise, have been able to use IFRS voluntarily for their individual financial statements, as an alternative to the old UK GAAP. With the introduction of the new UK GAAP, these entities can choose to:

  • continue to use full IFRS
  • switch to FRS 101 (see below), or
  • switch to FRS 102 (see below)

Micro-entity companies as defined in Companies Act 2006, s 384A, are able to opt to use separate and simplified accounting principles contained in FRS 105 .

Their financial statements will consist of a summarised profit and loss account, summarised balance sheet, and

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