Getting a grip of the financial reporting standards in the UK

10 December 2020

Advertorial

As a Swedish business about to establish in the UK it can be difficult to get a grip of the financial reporting standards in the new market, and to understand the differences between Swedish and UK financial reporting and tax regulations. “The biggest pitfall is not knowing what you don’t know. That is why you should appoint a qualified adviser when you set up in the UK, to ensure you follow all the rules and regulations from day one,” says Johan Aurén, Founder and Managing Director of Accountum.

Founded in 2009 to provide tax, auditing and accounting services for high growth Scandinavian businesses and high net worth individuals, Accountum is a firm of Chartered Accountants and Chartered Tax Advisers that has grown into offering a complete range of business advisory. “We are very much a onestop-shop for a Swedish company scaling up in the UK. We help with everything from the initial steps on planning, how to set up the business, registering a branch or subsidiary company, to setting up and running payroll, VAT reporting, and making sure internal controls are in place for fast and efficient monthly reporting,” says Johan Aurén, Founder and Managing Director of Accountum.

Expertise in cross-border taxation and transactions
What sets Accountum apart from many other firms is its vast knowledge of Swedish-British cross-border taxation and transactions. “We are very aware of the relationship between the UK and Sweden and the double tax treaties. By having us assisting here, and with our understanding of the financial reporting standards and taxation in both countries, we can tailor and set up systems that really work.”

Cloud solutions for financial reporting and bookkeeping
Usually Johan recommends his clients to use a cloud solution for financial reporting and bookkeeping. “With a cloud solution, people at the head office can for example have access into the UK bookkeeping system to extract information. We also create as much real-time data as possible to ensure that the data can be used and trusted in terms of working capital management and financial reporting.”

Biggest pitfall “not knowing what you don’t know”
There are several differences between the UK and Sweden when it comes to financial reporting standards, many of which overseas companies are not aware of. One of the biggest pitfalls when entering the UK market is, as Johan describes it, “not knowing what you don’t know”. “For example, an area like VAT is so incredibly complex. That is why you should appoint qualified advisers when you set up in the UK, to ensure you follow all the rules and regulations from day one.”

Major differences between the UK and Sweden
The UK is very much based on case law and a self-assessment system, according to Johan, and it is up to the taxpayer, the company, branch or the individual, to ensure their affairs are in order, compliant and to meet the filing deadlines. “In Sweden, for example, people might expect to be asked to file a tax return. That is not always the case in the UK – it is up to the taxpayer to make sure their affairs are in order.” Another key difference is in terms of who can sign for the company. Johan explains: “In Sweden, you have a proper register of who can sign for the company, whilst in the UK, anyone who is a director or acts as a director, can sign for the company and for all directors of the company. In the UK, as well, you don’t need to have an annual general meeting for a small company, even though it is best practice to do so.”

Sleep well at night experience
Johan says that people sometimes want to save costs by doing everything themselves, but to have the financial reporting, tax and bookkeeping taken off your shoulders helps a lot, especially when you are in a startup phase in a new jurisdiction. “We want to create that ‘sleep well at night experience’ for the client. The key is to ensure that you are using qualified advisers to look after you. As a director of a UK company it is your duty to ensure the company affairs are up to date. By using a qualified adviser rather than a non-qualified bookkeeper gives you more comfort in performing your duties.”

In Johan’s opinion there is a big shift in the UK market for accounting services providers. “Traditionally you would have used a bookkeeping firm for everyday bookkeeping, payroll and financial administration and then a Chartered Accountant for the year-end accounts, tax and advisory. However, this is where there is a significant shift at the moment due to new technology and automation where we as Chartered Accountants can provide real-time bookkeeping, implement our own control systems of the data to provide high quality advise almost in real time rather than at year-end.“

Johan's top tips for when setting up in the UK

• Do your research and use qualified advisors to help you with the tax and the financial reporting obligations.
• Appoint a qualified trusted partner from day one.
• Stick with your plan and don’t give up too quickly. The UK is a very competitive and tough market and it takes time to break through, but when you do, it is an amazing opportunity.

New SCC business guide on year-end accounting and taxation

As a general rule, all UK registered companies and registered branches must file annual accounts and corporate tax returns for each financial period each year. This guide will go through the key requirements and processes to comply with the year-end filings at Companies House and HMRC.

Download the guide