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
 
Amanda Newman
20th April 2018 Ely clients attend latest MTD Seminar

Monday evening saw the third of our MTD seminars, held at our Ely office. Having sold out very quickly, we had a full turnout. We explained to clients what MTD was and how the changes would directly affect them, as well as talking through the benefits of changing to digital accounting records. Following the presentation…

Read More »

Daniel Coleman
20th April 2018 Making Tax Digital – Time to run your business differently?

  So you have been successfully running your business for a number of years and now HMRC have introduced a making tax digital initiative which is going to change how you do things for the future.   You are now expected to start keeping digital records of your accounts, so what is the next step…

Read More »

Kim Clayden
13th April 2018 Making Tax Digital Seminar Two – St Ives

       Our second MTD seminar was in St Ives at the Slepe Hall Hotel on Thursday 12th April. Which was a much more convivial venue. A smaller group meant more personal conversations with our clients and we were able to give a number of clients the time they needed to fully understand the next steps for…

Read More »

Daniel Coleman
11th April 2018 Making Tax Digital ‘Roadshow’ – Huntingdon

We have begun the first of eight seminars discussing the preparation needed for making tax digital. Our first seminar kicked off in Huntingdon at the Marriott hotel and was a great success. With around 30 people attending we explained to clients what making tax digital was, how it was going to effect them and more…

Read More »

Paul Jefferson
5th April 2018 Reclaiming VAT: Checking the validity of your supplier invoices.

  VAT registered businesses will be aware that they can only reclaim VAT on business purchases if they have a valid VAT invoice.   For supplies over £250, this invoice should disclose: Supplier: sales invoice unique sequential invoice number, name, address and VAT number. Date and tax point, if different Your name and address Description…

Read More »

Scott Butcher
5th April 2018 Deadline Approaching for ATED forms

  If you have a residential property which is worth more than £500,000 and is held in a company then you will be required to complete an Annual Tax on Residential Dwellings (ATED) form. The deadline is fast approaching with all ATED forms for 2018 to 2019 tax year being due for filing by 30th…

Read More »