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Tax accounting disclosures |
See Also
Adjustment of profit | Factors affecting the tax charge | Factors affecting the tax rate | Profit and loss account / Income statement (D schedule) | Tax account
Select from the following headings:
Background | Developing the schedule | Completing the Schedule | Standard Sub-Schedules | Carry Forward | Related Errors
This schedule deals with the FRS19 requirement that information should be disclosed about factors affecting current and future tax charges. A key element of this is a requirement to disclose a reconciliation of the current tax charge for the period to the charge that would arise if the profits reported in the financial statements were charged at a standard rate of tax.
This reconciliation should identify all items which have a material impact on the tax charge. If there are material positive and negative amounts, these should be shown as separate reconciling items.
The reconciliation can be prepared by using either monetary amounts or tax rates, as a percentage of profits on ordinary activities before tax. The basis on which the standard rate of tax has been determined should also be disclosed.
The standard rate may be easily determined for a wholly UK entity paying tax at standard corporation tax rates. For entities with overseas undertakings, the impact of differing rates on the overseas profits would be a reconciling item. However if the entity's operations were predominantly outside the UK, a rate based on a weighted average of those overseas rates may be the appropriate 'standard' to use in the reconciliation. This would be determined from aggregating reconciliations for each country in the group.
This schedule will be developed as part of the F schedules. The F schedules can be developed from either the Adjustment of profit schedule or the Profit and Loss account by selecting
Develop, Other, Tax account ? P&L approach.
To complete the tax accounting sheets under IFRS, you should develop the tax basis balance sheet tax accounting sheets from Develop, Other, Tax account ? balance sheet approach.
Tax on Profit on Ordinary Activities
The tax on profit on ordinary activities is split into current tax and deferred tax.
The figures on this schedule should feed through from the other supporting tax accounting schedules. In particular, all ?C/F per accounts? balances on the Tax Account schedule must be entered before this schedule will be correct.
Brought forward figures will be automatically carried forward from the previous year's file where relevant. Whilst we endeavour to ensure the schedules we provide in the software are comprehensive, we recognise that there may be occasions where complex adjustments fall outside the scope of the standard schedules, hence we have provided cells that require manual data entry - these are described as 'Other'.
For 2009 files onwards we have changed the current tax section of the tax note to adhere more closely with the accounting standards disclosure of foreign tax suffered and foreign tax relief. A data entry cell has been added so that prior year tax adjustments in respect of foreign taxes can be tracked.
For 2008 onwards we have included a number of additional data entry rows in the deferred tax section of the tax note for certain items such as ?Change in estimate of recoverable deferred tax asset?. This is to allow further disclosure, as appropriate. Any amounts entered in these rows will automatically be subtracted from the ?Origination and reversal of timing differences? or ?Current year? figure.
Factors Affecting Tax Charge for the Current Period
The reconciliation should reflect the FRS 19 accounting standard. The figures should feed through automatically from the other supporting tax accounting schedules. Items can be reallocated between disclosure captions on the Factors affecting the tax charge or Factors affecting the tax rate.
From 2009 onwards, new data entry cells have also been added to the tax reconciliation to allow extra disclosure of reconciling items. Amounts reallocated to these cells will be automatically subtracted from the other cells in the tax reconciliation (i.e. it is a reallocation of items already included in the tax reconciliation).
There are two new 'Other' cells that link through from the Rationalisation of tax charge or Factors affecting the tax rate sheets. The new columns have been added to those sheets to allow users greater flexibility in their disclosure captions. If the columns are re-named on those supporting sheets, the new column name will flow through to this schedule in the reconciliation.
There is an additional data entry cell - 'Other', that can be renamed as appropriate for any other unusual adjustments.
The prior year comparative figures are automatically carried forward from the previous year's file, where relevant.
Provision for Deferred Tax
This shows a breakdown of the deferred tax provision and reconciliation to the current year deferred tax movement. The figures automatically feed through from other completed deferred tax schedules. The brought forward figures are automatically carried forward from the previous year's file where relevant.
Unrecognised deferred tax
For 2009 files onwards, an extra section has been added so that users can disclose amounts in relation to unrecognised deferred tax. Amounts in relation to unrecognised deferred tax are for disclosure purposes only and should be entered manually.
Note : To ensure that the layout of this is clear, display formulae are employed to suppress many of the 'zero' amounts.
This schedule has no standard supporting schedules.
© 2009 Thomson Reuters.