BIM31025 - Tax and accountancy: International Financial Reporting Standards and International Accounting Standards

Companies whose securities are traded on an EU regulated market will be required by the EU Regulation requiring the application of International Accounting Standards to prepare their consolidated accounts in accordance with International Accounting Standards Board (IASB)’s standards from 2005.

There is a useful comparison of International Accounting Standards and UK GAAP on the Inland Revenue Internet site at  http://www.inlandrevenue.gov.uk/practitioners/int_accounting_index.htm. Inland Revenue staff who do not have access to the Internet can see a copy on the Inland Revenue Intranet at http://www.newinternet.inrev.gov.uk/practitioners/int_accounting_index.htm.

It is likely that by 2005 IASB standards and those of the UK Accounting Standards Board (ASB) will be similar, although there may still be some differences. In particular, the ASB has introduced a set of less burdensome standards for small companies. The IASB is proposing to produce a set of international standards for smaller companies on similar lines, but it seems unlikely these will be in place by 2005.

EU Member States can choose to apply the requirement to:

1. only the consolidated accounts,
2. the individual accounts of the companies affected,
3. all companies, or to
4. any category of companies between the extremes.

The DTI is consulting on how to exercise this choice.

The following guidance explains in what way International Financial Reporting Standards may be relevant to the computation of taxable profits.