The Financial Reporting Council (FRC) released the UK Single Electronic Format (UK SEF) taxonomy in September 2020 as part of its 2021 suite of taxonomies. Taxonomies can seem intricate and complex at times. ESEF filers in the UK can choose between the ESEF and UKSEF taxonomies for tagging their information.
ESEF taxonomy vs. UKSEF taxonomy?
| ESEF taxonomy | UKSEF taxonomy |
| ESEF taxonomy is the same taxonomy that European companies use. | UKSEF taxonomy is an extension of the ESEF taxonomy and allows tagging of additional information. (More on this below) |
In short, we can say that the UKSEF taxonomy refers to the UK-specific variant of the ESEF taxonomy. If you are a filer listed on the Main UK regulated market, it is essential to count these 5 points:
1. UKSEF Is NOT A Mandatory Requirement
From January 1, 2022, it has become mandatory for all the companies in the UK to comply with ESEF requirements by preparing Annual Financial Reports(AFRs) in the xHTML format, with XBRL tags embedded in the documents. However, it is NOT mandatory for companies to use the UKSEF taxonomy when filing.
Fin-X encourages the filing of AFRs voluntarily to improve the transparency and quality of the reports. Companies can prepare themselves well in advance, for the mandate.
2. UKSEF Taxonomy Versions And The Updates
Taxonomies are expected to be updated from time to time. These updates reflect the changes in standards and user experience. Taxonomy updates are usually announced well in advance. At present, the UKSEF Taxonomy is subject to be reviewed annually until it achieves maturity.
The basic rule is to follow only two versions of the taxonomies when developing your AFRs- the latest version (UKSEF 2022) and the penultimate version (UKSEF 2021).
On 8 October 2021: The latest versions of the Full Suite of FRC Taxonomies 2022 was released
On 14 January 2022: The update with UKSEF 2022 Taxonomy was released.
3. UKSEF 2021 vs UKSEF 2022
The UKSEF 2021:
This version of the taxonomy was deliberately limited in scope. Due to the uncertainty over the exact nature of the UK’s departure from the European Union. It includes:
- Mandatory Tagging of all financial items in ESEF Taxonomy
- Voluntary Tagging of Streamlined Energy and Carbon Reporting (SECR) data
- For Companies House Filings, it is mandatory to tag the UK Companies House Registered Number and Balance Sheet Date/ Period End Date
| UKSEF 2021 = ESEF + SECR + Company’s registered number and period end date |
Read more about UKSEF Taxonomy 2021.
The UKSEF 2022:
The newer version of the updated UKSEF Taxonomy intends to broaden the scope of mandatory UK-specific information required by regulators. This re-architected 2022 version includes:
- Mandatory Tagging of all financial items in ESEF Taxonomy
- Voluntary Tagging of Streamlined Energy and Carbon Reporting (SECR) data
- Voluntary Tagging of Task-force on Climate-related Financial Disclosure (TCFD) information, Pay Ratio (PR) information, and Gender Pay Gap (GPG) information.
- For Companies House Filings, it is mandatory to tag the UK Companies House Registered Number, Balance Sheet Date/ Period End Date, cover the legal requirements of a Directors’ Report, an Auditor’s Report, a P&L (Income Statement) for the individual reporting entity where relevant, and a Balance Sheet (Statement of Financial Position) for the individual entity.
This UKSEF Taxonomy 2022 version is better structured for any future amendments.
| UKSEF = ESEF + SECR + TCFD + PR + GPG + Company’s registered number, period end date, Directors’ Report, Auditor’s Report, a P&L and a Balance Sheet |
4. Scope Of Tagging In UKSEF Taxonomy
- Choosing the Right Tag
Companies should make sure the tags they use correctly reflect the accounting meaning/ financial concept of the reported information. It is vital to carefully consider the tag labels and references as per the IFRS Standards.
- Creating Extensions
Extensions are defined when no suitable tag exists in the core taxonomy. They should be used only where necessary.
- Common Tagging Issues
Your AFRs can be prone to various types of errors or warnings. Make sure that you review the report before the final submission. Watch out for common issues like wrong signs (+ or -) and calculation inconsistencies.
5. Aligning With The Structured Reporting Process
The Structured Reporting Process involves 3 steps:
- Producing the AFR in an XHTML format is mandatory. This document will be marked up using standard XHTML tags. The file must have a ‘.html’ file extension.
- Submit the prepared AFR in a zipped report package (*.zip extension only).
- Performing Test-Run and validation. This helps structured submissions to meet the desired quality. In FCA, there is an option for companies to submit their tagged reports for validation only. The AFRs will not be published, but run through a validator. The filer will receive feedback on whether there were any errors or warnings in their AFR. The Financial Reporting Council’s (FRC)Lab has undertaken a review of tagged filings and has identified key issues that filers might want to consider.