News September 2017 FRC proposes amendments to FRS 102 for gift aid payments

FRC proposes amendments to FRS 102 for gift aid payments

20 September 2017
Today, the Financial Reporting Council (FRC) issues FRED 68, which responds to the significant differences in accounting treatment arising in practice, in relation to the accounting for gift aid payments made by a subsidiary to its charitable parent.

Such payments are made during the nine months following the relevant reporting date, and are a distribution to owners but a donation for tax purposes.  These draft amendments propose that the tax effects of such a gift aid payment, when it is probable that it will be made in the nine months following the reporting date, shall be taken into account at the reporting date.  This will improve the consistency of reporting between entities and the relevance of the information provided to users.

FRED 68 also discusses other aspects of the accounting for the expected gift aid payment.

Responses to FRED 68 should be sent to by 20 October 2017.

The FRC expects to finalise these proposals with those in FRED 67, and their proposed effective date is accounting periods beginning on or after 1 January 2019, with early application permitted provided all of the amendments are applied at the same time (i.e. including those arising from FRED 67).
The following documents are referred to above:
  1. FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (PDF)
  2. FRED 67 Draft amendments to FRS 102 – Triennial review 2017 – Incremental improvements and clarifications (Consultation) 
  3. FRED 68 Draft amendments to FRS 102 – Payments by subsidiaries to their charitable parents that qualify for gift aid(PDF)