Audit and assurance

With no firm date yet confirmed for UK audit reform, ICAEW continues to call for government commitment to legislative change in July following delays to the draft Audit Reform Bill. While support for operational improvements across the profession remains strong, uncertainty around statutory backing for the Audit, Reporting and Governance Authority (ARGA) and wider reforms risks undermining confidence in the government’s programme. ICAEW urges clarity to help maintain momentum and provide long-term direction. 

The FRC also issued revisions to Provision 29 of the UK Corporate Governance Code, with implications for audit committees and external auditors. From January 2026, boards of premium listed companies must produce a formal declaration on the effectiveness of internal controls, subject to audit committee review. Auditors will be expected to update risk-assessment processes and consider how these board statements interact with their own responsibilities, although no new audit requirement is introduced.

Separately, on 25 June, the government launched a consultation on the UK Sustainability Assurance Regime (UK SAR), aiming to establish a framework for independent assurance of sustainability disclosures, including those aligned with IFRS Sustainability Disclosure Standards. The proposed regime will initially be voluntary, with oversight by ARGA. ICAEW supports the direction of travel, but stresses the importance of proportionality, audit profession readiness and close alignment with international frameworks. Members are welcome to provide their views on the proposals by emailing tdaf@icaew.com.

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Corporate reporting

The Financial Reporting Council (FRC) clarified FRS 102 requirements for disclosure of related party transactions by UK small entities, following the Periodic Review 2024 amendments. Effective for accounting periods starting 1 January 2026, UK small entities applying FRS 102 Section 1A must apply paragraphs 33.9 and 33.14 of FRS 102 (but not 33.7, which relates to disclosure of key personnel compensation including directors' remuneration). This means that most related party transactions will need to be disclosed. The FRC confirmed that while FRS 102 does not explicitly require disclosure of directors’ remuneration for UK small entities, such disclosures may still be necessary in certain cases - for example, where necessary to present a true and fair view under the Companies Act 2006.

On its Changes to UK company law web pages, Companies House has indicated that changes to accounts filing requirements will be implemented from 1 April 2027. Companies House has also been contacting registered email addresses of companies on the register to inform them of this date.

From 1 April 2027, all companies (including those filing dormant accounts) will be required to submit their accounts using commercial software from this date; paper and web-based filing routes for accounts will be closed. In addition, small and micro-entities will be required to file their profit and loss account and the option to file abridged accounts will be removed.

The FRC published FRED 87: Draft Amendments to FRS 102 - Adapted formats on 17 July 2025. Following recent changes to IFRS Accounting Standards, the exposure draft proposes amendments to ensure FRS 102 remains fit for purpose and aligned with IFRS Accounting Standards in relation to adapted formats for the balance sheet and/or the profit and loss account. Entities that do not choose to use the adapted formats under FRS 102 will not be affected by the proposed amendments. FRED 87 closes for comment on 10 October 2025. 

The FRC has released a draft of the 2026 Taxonomy Suite for public consultation until 10 September. The taxonomy provides a structured set of digital definitions used to tag financial data in electronic reports. Key changes proposed include updates to reflect recent amendments to IFRS 7 Financial Instruments: Disclosures and UK Financial Reporting Standards (FRED 85), enhanced options for revenue disaggregation, improved audit report disclosures, and significant revisions to the Charities Taxonomy extension to reflect proposed changes to the Charities SORP 2026. The FRC expect to release the final version of the Taxonomy Suite in November 2025 alongside a feedback statement.

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Tax

HMRC published its accounts and annual report for 2024/25 in July, confirming that it is continuing to miss its key customer service targets. The report shows that more people are interacting digitally with HMRC. Overall, 76.2% of customer service interactions with HMRC were made through automated or digital self-serve channels, up from 73.2% in 2023/24. HMRC’s intends to reach 90% by 2029/30. 

HMRC’s Transformation Roadmap, also published in July, reveals the scale of its digital ambitions. The roadmap sets out more than 50 IT projects, services and measures that it says will modernise the UK’s tax and customs systems and make it easier for taxpayers and agents to interact with HMRC. 

July also saw L-day, with the government publishing draft legislation for the Finance Bill 2025/26 across a wide range of areas, including inheritance tax reforms and agent registration. New draft regulations for Making Tax Digital (MTD) for income tax confirm several policy announcements, including the reduction of the MTD threshold to £20,000 from April 2028.

In other news, HMRC announced that an issue affecting class 2 national insurance contributions and 2024/25 tax returns will not now be fixed until September, and it wrote to some companies asking them to review the tax treatment of their loan relationships in light of recent decisions of the Court of Appeal.

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