UK businesses have experienced several changes to the corporate reporting regime after Brexit.
3.1. Accounting for UK company
UK companies previously chose whether to produce their accounts using the UK Generally Accepted Accounting Practices (UK GAAP) or International Accounting Standards as endorsed by the EU (EU IAS).
However, after Brexit, all UK companies need to adapt to the UK-adopted International Financial Accounting Standards (UK IAS) instead of EU IAS from January 2021 onwards.
Both UK and EU standards are generally the same, but differences can occur later if the UK and the EU take different approaches to future amendments.
UK parent establishments with a presence in the European Economic Area (EEA) (e.g. a branch) need to check the reporting requirements in the relevant EEA country.
3.2. UK company with a European Economic Area (EEA) listing
The company will produce accounts in regards to the UK Companies Act 2006 for domestic filing purposes.
Additionally, the company has to comply with regulatory requirements in the jurisdictions where it is listed and publishes accounts using EU-adopted IAS as issued by the International Accounting Standards Board (IASB).
3.3. UK subsidiary with an EEA-registered parent
After Brexit, UK subsidiaries with EEA parent companies are not eligible for certain exemptions from filing accounts anymore. The UK subsidiaries are now required to prepare and file accounts annually with Companies House.
4. Corporate law changes for business after Brexit
As much as Brexit represents a critical shift in EU-UK corporate tax implications, it also poses a significant impact on corporate law. It is vital to make sure that your business is aware of these changes to not get caught out.
These changes normally affect businesses that have a cross-border relationship with the EU, including
A business conducts operations in the EU;
An EU company or individual operating in the UK; or
A UK branch with an EEA parent.
Below are some changes in corporate law that we think are relevant to your business
4.1. Filing and disclosure changes
The following companies must file additional information to Companies House:
UK companies with EEA corporate officers; and
EEA companies with a registered UK establishment.
An EEA company with a registered UK establishment is also required to disclose additional public-facing information, such as website, letterhead, and order forms.
4.2. Freedom of establishment
Since the UK has become a “third country” for EU law purposes, it loses the rights to freedom of establishment within the EU. Therefore, UK businesses can only establish themselves within the relevant law regime of each Member State.
UK companies operating in the EU need to restructure to comply with legal requirements in the relevant EU Member States.
4.3. Appointment of a fiscal representative
UK companies operating in the EU need to register for EU VAT and appoint fiscal representatives in accordance with the requirements of the countries where they sell.
Fiscal representatives are local companies or persons who represent your business in dealing with the local tax authorities regarding tax reporting and VAT debts.
In some EU member states, it is a must for UK companies to have a fiscal representative. Companies that fail to appoint a fiscal representative are heavily punished by local tax authorities.
4.4. Registration of new EORI
An Economic Operator Registration and Identification Number, or EORI, is an ID number used to register and track customs authorizations, approvals, and decisions.
Previously, one EORI could be used for tax authorities in both the UK and other EU member states. After Brexit, businesses are required to have a separate UK and EU EORI number.
It is advised for businesses to consult with local tax authorities to know whether they need a new EORI number.
Comments