Tax transparency in listed companies' annual reports encouraged by FRC
The Financial Reporting Council (FRC) has said that UK listed companies should be clearer about their tax reporting to ensure that it is done as transparently as possible.
They recommended that the link between accounting profit and tax paid should be a part of a company’s annual reporting process. This should be presented in a way that helps others understand how the relationship between the two could change.
The FRC has announced a thematic review, and will be writing to a number of companies on the FTSE350 stock exchange to let them know it will review their next published reports.
The International Accounting Standards (IAS) and UK corporate reporting rules both require that companies disclose the main risks and uncertainties on their books, as well as the contingency plans in place to mitigate any potential negative impacts.
The FRC said that "the current interest in certain international tax treaties" was one of the main reasons for the new review.
Considerable public interest
Chair of the FRC's Financial Reporting Review Panel and a member of its conduct committee, Geoffrey Green, said: "There is considerable public interest currently in international tax arrangements, prompted by developments both in the UK and on a global basis."
He added: "Investors have a heightened interest in wanting to understand the policy decisions made by companies and the impact these have on their current and future accounts."