The return of the group let exemption!

The return of the group let exemption!

Following the introduction of Financial Reporting Standard 102 (FRS102) over the past few years there have been a number of scenarios whereby a group company renting their property to another trading company within the same group found itself accounting for the property differently to the position under old UK Generally Accepted Accounting Principles (GAAP).

Under FRS102 the value of this property would be measured each year with reference to fair value rather than cost and accounting for revaluation movements through the profit and loss account. The nonsensical situation could then arise whereby these adjustments would “fall out” at consolidated group level where the property was seen as a trading property of the group and could be measured with reference to cost.

The changes announced recently by the Financial Reporting Council (FRC) mean that such property can be measured with reference to cost, rather than fair value, at company level as well as in the consolidated group; effectively reinstating the group let exemption which existed under old UK GAAP, albeit in a slightly different guise.

These changes apply for accounting periods commencing on or after 1 January 2019, however early adoption is available and the FRC will be publishing full revised standards reflecting this in early 2018.

For more information please contact Michael Breame
t: 01245 254284


Michael Breame