In the next year your accountant will start talking to you about the changes in accounting standards in FRS 102. This new standard is about moving the UK Accounting standards closer to the International Accounting Standards.
The main difference will be an increase in costs and these will come in two parts.
In the year that you convert to the new standards there will be extra costs because your previous year’s accounts will have to be converted to the new standards.
There will then be higher costs because there are extra reporting requirements.
Here are some of the new requirements:
- There will be new accruals for items such as Holiday pay.
- You will have to declare any foreign currency transactions you have set up but not actioned.
- You will need to make declarations about Fixed Assets, Intangible Assets such as intellectual property and Goodwill.
What can you do to minimise these costs. Be prepared. Find out from your accountant which of these changes affect you and what the tax implications.
There should not be an increase in the Tax you pay soley due to these accounting changes, but changes to the timing of when the Tax will be paid will affect your cashflow.
Note: This article was written in 2015.