This article is provided by BRC Associate Member, Crowe.
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Disclaimer: This is a preliminary assessment of the subscription rules that will come in next April. The Guidance has not yet been produced, so this note is inevitably incomplete and may need to be amended.
The DMCC Act 2024 introduces a new regulatory regime, especially around subscription contracts. From Spring 2026, businesses (especially consumer-facing organisations) must adapt to rules on auto-renewals and trials, impacting compliance and revenue recognition.
What is the DMCC?
The Digital Markets, Competition and Consumers Act 2024 (DMCC) is a landmark piece of legislation which introduces a new regulatory regime for digital markets and strengthens consumer rights in key areas, which is expected to apply from Spring 2026.
One area it is set to reshape is how UK businesses handle subscriptions entered into with a consumer. These are either auto renew subscriptions or those with a trial period. For those working in or with consumer-facing businesses, the implications go beyond compliance. They alter the parameters of how a business recognises revenue and records liabilities.
Implications for consumer-facing retail organisations
At its heart, the DMCC aims to eliminate “subscription traps” situations where consumers are locked into recurring payments without clear consent or easy exit. In most cases, consumers have unknowingly or unwillingly fallen into these traps and it is estimated this costs £1.6 billion annually1.
For retailers offering subscriptions e.g., subscription boxes, annual delivery subscriptions, or digital services, this means that you now need to ensure you provide the following:
- clear pre-contract information
- prominent renewal reminders
- frictionless cancellation processes.
Importantly, consumers now have a 14-day cooling-off period not just at sign-up, but also after certain renewals.
Dealing with the practicalities
Subscriptions can take many forms, whether this be goods, services or digital content. Therefore, the practical implications of the new cooling off periods can range, and retailers must carefully look into how their products are categorised.
For example, goods can be broken down into three areas returnable, non-returnable (perishable/bespoke) and non-returnable (unsealed), each with their own cooling-off period refund considerations.
From an accounting standpoint, under UK GAAP, and IFRS 15 for those applying international standards, revenue must only be recognised when it’s earned and unlikely to be reversed.
With the DMCC’s enhanced cancellation rights, subscription income is now more uncertain, especially in the first few weeks of a new term. Retailers will need to treat these amounts as variable consideration, appropriately accounting for deferred revenue and recognising refund liabilities until the cooling-off window closes.
For example, if an annual subscription auto-renews and the consumer now has a 14-day cooling-off window to cancel, the retailer will have to consider recognising a refund liability based on expected cancellations.
In addition, if subscription cancellations are now easier, churn may increase. That affects not just revenue forecasts, but if a business capitalises their customer acquisition costs then amortisation schedules will need to be reconsidered. While the accounting standards haven’t changed, the economic reality of subscriptions has, and financial reporting must reflect this.
Next steps
In short, the DMCC Act doesn’t just protect consumers it challenges retailers to be more transparent, more responsive, and more prudent in their financial reporting.
At Crowe, we’re continually work with our clients to align their commercial practices with the latest accounting standards, ensuring that revenue is recognised only when it’s truly earned.
If you would like further advice or support on this topic, please contact Kay Monks or the Crowe Retail Team.
NB. Further guidance is expected from the government in Autumn 2025.
1 New measures unveiled to crack down on subscription traps - GOV.UK
