Adopting Financial Reporting Standard (FRS) 109 & 39 & the Tax Implications

Key requirements

Companies adopting FRS 109 or SFRS(I) 9 must generally use the corresponding tax treatment and cannot opt out as under the former FRS 39 regime. A company outside those accounting requirements may elect in writing, with the election irrevocable. Revenue-account instruments measured through profit or loss can bring recognised gains or losses into tax even before realisation. For instruments through other comprehensive income, taxation or deduction generally waits until realisation under the stated rules. Capital-account treatment and impairment have additional conditions. Identify the instrument’s revenue or capital character and measurement category before making a tax adjustment; do not assume every fair-value movement has identical treatment.