FRC calls for clearer reporting of tax uncertainties
The Financial Reporting Council's Corporate Reporting Review (CRR) team has called for companies to articulate better how they account for tax uncertainties, following a thematic review of tax reporting in annual reports and accounts.
In December 2015, the FRC wrote to 33 FTSE 350 companies informing them that tax disclosures in their next annual report and accounts would be reviewed by the CRR. Most companies, particularly in the FTSE 250, responded positively and the FRC found evidence of improvements in the transparency of tax disclosures in the strategic report and effective tax rate reconciliations.
There was, however, scope for companies to articulate better how they account for tax uncertainties by explaining the bases for recognition and measurement. Companies should also consider whether there are significant judgements and estimation uncertainties relating to tax and seek to improve their disclosures in these areas.
The FRC's thematic review on tax disclosures can be found here.