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Unincorporated Associations and financial reports

Do unincorporated associations need to adopt FRS102 for corporation tax revenue recognition ?

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Good morning all

I have spent this evening looking at the tax treatment  of say unit trusts if held by a body corporate, and effectively it seems to boil down to whether they can adopt the cost basis re carrying same per FRS105 or require to annually value per FRS102  with effectively unrealised gains being taxed .

On then glancing at FRS102 I found this at FRS102 Overview(V)

"FRS 102 is designed to apply to the general purpose financial statements and financial reporting of entities including those that are not constituted as companies and those that are not profit-oriented. General purpose financial statements are intended to focus on the common information needs of a wide range of users: shareholders, lenders, other creditors, employees and members of the public, for example."

When I look at FRS105 it refers to Micro Entities, but seems to define them quite tightly at Overview (ii)

 "FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime is an accounting standard designed to apply to the financial statements of companies, LLPs and qualifying partnerships that qualify for, and choose to apply, the micro-entities regime."

So if reading correctlly, when considering revenue recognition an unincorporated association, irrespective of size, possibly cannot report as a Micro Entity and thus cannot adopt FRS105 but must follow the revenue recognition (especially re financial instruments)  of FRS102.

Am I reading this correctly, does anyone know different.  Ideally I would like to follow FRS102  re accounts as wish to revalue investment property owned, and I am not so much fussed about formatting our accounts into a FRS102 layout, quite happoy doing this, but am more interested re the different regimes re the timing of revenue recognition for tax if say we invested suplus funds in a tracker (I believe requiring annual valuation re tax) or in investment trusts (share instruments coming under basic financial instruments) .

If my understanding is correct, and we would need to follow FRS102, then my strong suggestion will be to restrict investments to ITs re equity investments, no other type instruments to be permitted, but this view may not be popular 

Luckily we have not done anything yet but we are in the midst of updating our constitution and as part of that we do wish to introduce "permitted" investments that may be made .

Anyone considered this before? Views? Words of wisdom?


p.s. This link I found from Standard Life re taxation of investments within bodies corporate is a good summary and may generally be useful to some of you.




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By Wanderer
14th May 2021 08:39

ICAEW wrote:

9. Can unincorporated businesses apply FRS 105?
The FRC has not explicitly permitted or prohibited use of FRS 105 by unincorporated businesses or individuals (which, if set up as companies, would be eligible for the micro-entities regime) for the purpose of calculating trading profits for submission to the tax authorities.
Instead, the FRC note that this is a matter for the tax authorities.
HMRC has confirmed to ICAEW that it will accept calculations of trading profits for income tax purposes prepared under FRS 105 if the size criteria have been met.
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Replying to Wanderer:
paddle steamer
14th May 2021 12:35

Thank you very much, greatly appreciated.

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