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Can UK Registered Companies File Accounts under US GAAP?

Can UK Registered Companies File Accounts under US GAAP?

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Summary

  • Listed companies in the UK are required by law to prepare consolidated financial statements under IFRS
  • Quoted companies in the UK may prepare consolidated financial statements under US GAAP for a period of up to 4 years if they are listed on a US SEC registered stock exchange. This is allowed under SI 2023/975, The Accounting Standards (Prescribed Bodies) (United States of America and Japan) Regulations 2023
  • At the end of the 4-year period, quoted companies must prepare consolidated financial statements under UK GAAP or IFRS
  • Parent company’s company-only financial statements must be prepared under UK GAAP or IFRS

Regulatory Requirements

Companies Act in the UK requires all UK registered companies to file accounts under either UK GAAP (FRS 101, 102, etc.) or UK adopted IFRS (IFRS). Listed companies, which are companies whose shares are admitted for trading on a UK regulated market, are required to file accounts under IFRS. However, quoted companies, which are UK registered companies whose shares are admitted for trading on a stock exchange outside the UK, are permitted in certain circumstances to file their consolidated financial statements with Companies House under financial reporting frameworks other than UK GAAP and IFRS for a certain period of time. This also includes filing consolidated financial statements under US GAAP with Companies House in the UK. This is owing to SI 2023/975 (previously SI 2015/1675).

Application of SI 2023/975

Navigating SI 2023/975 can be complex. In this article, we break down the key tenets of SI 2023/975 and how we support organisations to benefit from, and prepare for, transition arrangements provided in this statutory instrument.

Companies registered in the UK sometimes opt to list on stock markets outside the UK to access a wider pool of funds or to expand their presence in overseas markets. The UK government recognised this need in 2015 and to facilitate this process, issued SI 2015/1675. This SI was subsequently revised with SI 2023/975.

SI 2023/975 aims to facilitate UK companies listing on all US SEC registered stock markets by allowing them to file consolidated financial statements with Companies House in the UK for a period of up to 4 years under the financial reporting framework prescribed by the Financial Accounting Standards Board (FASB) – this is usually the US Generally Accepted Accounting Principles (US GAAP).

Expiry of SI 2023/975

On statutory expiration after 4 years of initial application of SI 2023/975, the company must transition to filing consolidated financial statements in the UK with Companies House prepared under either UK GAAP or IFRS. This often presents as a difficult choice for management to make, one that has benefits or consequences reaching far out into the future. On the one hand, transitioning to UK GAAP is cost-effective compared with transitioning to IFRS, and requires significantly lower disclosures to present and maintain. On the other hand, IFRS is a more readily recognised financial reporting framework and allows for comparability internationally. The decision to pursue transition to either UK GAAP or IFRS will depend on each company’s circumstances. Regardless of whether the company transitions to UK GAAP or IFRS, the lift required on transition is significant and management is encouraged to engage technical advisors, such as Frazier & Deeter, as early as possible.

Real-world Example: FD recently supported a UK-registered life sciences group through SI 2023/975. Our team guided the company in applying transitional provisions, maintaining UK statutory compliance and planning for the eventual transition from US GAAP to UK GAAP. By establishing a structured conversion plan, preparing comprehensive technical documentation and coordinating directly with auditors, we ensured a smooth, efficient transition while minimizing reporting complexity. Read the full story here.

Interaction of Parent’s Company-only Accounts with SI 2023/975

The transitional arrangements available under SI 2023/975 do not extend to a company’s individual financial statements (often referred to as the company-only or parent-only accounts). Throughout a company’s application of SI 2023/975 for filing of its consolidated financial statements in the UK with Companies House, the company’s parent-only accounts are still required to prepared under either UK GAAP or IFRS.

In our experience, in addition to the requirement of maintaining a UK GAAP or IFRS set of company-only accounts, common areas where a transition to either UK GAAP or IFRS is required for the company-only financial statements in each of the 4 years where the SI is applied to the consolidated financial statements are:

  • Share-based payments (SBP) arrangements, the accounting for which is significantly different under UK GAAP/IFRS and US GAAP
  • Investments in subsidiaries (including impairment review), which are eliminated on consolidation and require separate schedules to be maintained and reviewed annually
  • Statement of changes in equity, where US GAAP components of equity differ significantly to those required under the Companies Act in the UK
  • Additional notes to the primary financial statements which are not required under US GAAP but required under Companies Act in the UK

Most UK registered companies that list on a US SEC registered stock market will do so on either the NYSE or the NASDAQ. In doing so, these companies would be in scope of requirements under Companies Act applicable to quoted companies. This means that certain statements and reports in the front half of the annual accounts will either be required to be referenced to US GAAP filings or, for example, in the case of the directors’ remuneration report, be required to be produced entirely for UK filings to comply with the requirements of the Companies Act.

Questions about filing UK accounts under US GAAP?

Navigating SI 2023/975 and planning for eventual transition to UK GAAP or IFRS can be complex. Our technical advisors help UK-registered companies stay compliant, streamline reporting, and minimize disruption. Contact us today to discuss your reporting requirements.

Contributors

Ali Amar, Audit Senior Manager

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