Significant changes are on the horizon for how UK companies file their accounts digitally. Driven by a confluence of factors, including the Economic Crime & Transparency Act 2023, stricter rules at Companies House, higher company thresholds, and post-Brexit regulatory adjustments, the Financial Reporting Council (FRC) is “in the early stages of considering significant and substantial changes regarding their digital filing requirements.”
This planned overhaul, dubbed the “Taxonomies project,” involves a collaborative effort between the FRC, Companies House, HMRC, the Charity Commission, and Irish Revenue. While a firm timetable for the rollout of new rules isn’t yet available, the ambition is for these developments to align with the government’s stated aim of promoting growth and lighter regulation.
Last autumn, the FRC initiated a discussion paper on the “Future of UK Digital Reporting,” inviting feedback from company reporters, software developers, and professional bodies. The response was clear and overwhelming: a strong call for less complex rules. The prevailing sentiment was that “the technical methodology is not as important as reducing the complexity and costs of digital reporting for preparers.”
While some respondents acknowledged the value of assurance in boosting trust and data quality in digital reporting, others raised concerns about the potential for increased costs, proportionality, and the burden on smaller entities. There was also support for a phased or proportional implementation approach to ease the transition for businesses. Crucially, respondents emphasised the need for clear definitions of materiality specific to tagging and for assurance processes to align with existing auditing frameworks, such as ISAE 3000.
Concerns were also voiced regarding alignment with global rules. Businesses stressed the importance of balancing UK-specific reporting requirements with maintaining comparability with international accounting standards.
Despite these discussions, the FRC has indicated that “no specific decisions will be taken this year as a direct result of the discussion paper [Future of UK Digital Reporting].” However, the feedback gathered will directly “inform the relevant regulators’ current policy thinking and ongoing service development.”
At the heart of the FRC’s digital reporting requirements is the use of XBRL (extensible business reporting language) Taxonomies. This system allows companies to disclose information digitally in a standardised way. The aim of this digital reporting, as highlighted by the FRC, is to create “a clearer and more user-friendly process for regulatory reporting,” alongside improving the accuracy, comparability, accessibility, and overall value of reported data.
It’s important to note that the FRC has not yet committed to any specific timeline for changes within its remit and will make decisions independently of other regulators and HMRC. Any future changes may also be subject to further consultation.
Mark Babington, Executive Director of Regulatory Standards at the FRC, commented: “The feedback clearly demonstrates that the digital reporting landscape in the UK is evolving, with stakeholders recognising both the benefits and challenges. As we enter a new phase of digital reporting in 2025, the FRC remains committed to enabling efficient, accessible digital reporting that serves the public interest while supporting UK economic growth.”
To further support digital reporting, the FRC established a dedicated digital reporting and taxonomies team last year. They also launched a digital reporting Viewer tool, which aims to improve free access to structured company reporting data and allows users to download machine-readable data directly from accounts filed with Companies House.
This significant shift towards digital filing presents both challenges and opportunities for UK businesses. Staying informed and preparing for these changes will be crucial for smooth compliance.
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