Accounting Standards

13th July 2016

FRS102: How affects TechCo’s ?
Accounting standard FRS102 is the biggest change in accounting rules for nearly a generation. It will influence how statutory accounts are presented, the terminology and how profit (and hence tax) is calculated. All SME companies must follow this standard for accounting periods commencing on or after 1 January 2016, with earlier adoption encouraged. So how will this affect technology company accounts:

Existing Rules New Rules
Deferred Development Expenditure General criteria for what project costs can be capitalised. Much tighter criteria for what project costs can be capitalised (splitting research and development phases).
Government Capital Grants Amortised over the life of the related assets. Option to recognise fully when eligibility criteria fulfilled.
Freehold Property Option of valuing at depreciated cost or
open market value.
More situations require annual adjustment to open market valuation.
Intangible Assets (including goodwill) Amortised over predicted (but rebuttable) maximum useful economic life of 20 years. Amortised over predicted maximum useful economic life of 5 years.
Holiday Pay No explicit requirement to adjust. Must make a year end accrual or prepayment for any material difference.
Deferred Tax Not required on re-valued property. Must now be provided for upon the gain or loss on re-valued property.
Interest Free Loans Stated at past money value. Discounted back to be stated at net present value of future repayments.

As always, the choice of accounting policy, where there is now a choice, will depend upon whether your business is driven by profitability, tax or solvency.



 
Other items in Blogs
 
Neil Groom
12th October 2017 Trust Registration Service

  HMRC has released guidance for trustees and their agents for the new online Trust Registration Service (TRS) which has been operating since the middle of July. The new service replaces the old form 41G, as well as a section of the trust tax return used to report changes in trustee contact details.   Trusts…

Read More »

Mark Burrows
11th October 2017 Making Tax Digital – will free software be available?

  When Making Tax Digital (MTD) was first announced, HM Revenue & Customs said that free software would be available for the most straightforward small businesses.  Under MTD records of business income and expenses will be required to be kept digitally using a software product or app.   HMRC have since provided clarification on which…

Read More »

Thomas Carter
11th October 2017 Xerocon London 2017

Two fantastic days at Xerocon London on 4th and 5th October as 2000 attendees from 24 countries descended on the ExCel, the annual event for Xero Partners. Over the two days, four of our staff: Tom Carter, Dan Coleman, Steph Tinkler and Chip Moore attended the event. It was an opportunity to learn about new…

Read More »

Philip Peters
5th October 2017 HMRC “Connect”: Now checking businesses that should VAT register.

We have known since 2010 that HMRC has a computer programme, called “Connect”, that is collecting data from a variety of sources about taxpayers, and then using this intelligence to check on correct tax compliance. We have known that these data sources include Banks, Social Media, DVLA, Local Authorities, Foreign Tax Jurisdictions and Land Registry.…

Read More »

Catherine Hubbard
5th October 2017 Simple Assessment

  HMRC have now implemented their ‘Simple Assessment’ project, where they use the information already available to them from employers, pension providers, the DWP and banks to calculate the tax for those with straightforward or ’Simple’ tax affairs, without the need for a tax return to be completed.   In theory this sounds like an…

Read More »

Julie Quayle
27th September 2017 Parental Bereavement (Pay and Leave) Bill Introduce to Parliament

  For the first time, parents who are employed and have suffered the death of a child would receive statutory paid leave to grieve, under a new law being supported by the Government. Currently, employees have a day-one right to take a “reasonable” amount of time off work to deal with a family or dependant…

Read More »