We are probably going through the largest shake-up in UK accounting for a generation. For accounting periods starting after 31 December 2014, large and medium-sized businesses are required to apply FRS 102, Financial Reporting Standard applicable in the UK & Ireland, forsaking all other accounting standards and treatments. And it looks very likely that small companies will have to do the same from 1 January 2016. Of course, earlier adoption of FRS 102 has always been encouraged.

The corporation tax treatment of debt and loans largely follows the accounting treatment, but there are some important exceptions. FRS 102 signals some important changes in the way in which debt is accounted for.