The following Corporation Tax guidance note by Tolley in association with Malcolm Greenbaum provides comprehensive and up to date tax information covering:
The fundamental principle when transitioning from old UK GAAP to FRS 102 is that any changes in accounting policy must be applied retrospectively.
There are, however, transitional rules to make the process more efficient, where some adjustments will not be required.
Transitional adjustments can affect taxable profits and consequently the corporation tax computation in the year in which FRS 102 is adopted (and subsequently). This is covered in detail in the Transitional issues affecting the corporation tax computation and return guidance note.
As discussed in the FRS 102 ― current and deferred tax guidance note, the treatment of current tax is not changed by FRS 102 as compared with old UK GAAP.
However, deferred tax under FRS 102 focuses on timing differences between taxable profit and comprehensive income, ie it includes gains and losses recognised outside the income statement, as well as fair value adjustments in a business combination.
On transition to FRS 102, any gains and losses included in comprehensive income at the start of the comparative year which were originally recognised outside the income statement will need to be examined. Where they represent a timing difference, a deferred tax provision will need to be created at the transition date. For example, deferred tax would need to be recognised on any revaluation gains and losses at the transition date, as well as any gains rolled over as at the transition date, as the treatment of these items differs under old UK GAAP. See the FRS 102 ― specific deferred tax issues guidance note for details.
The rate of tax used for these calculations is the rate expected to apply when the timing difference reverses, based on the rates enacted or substantively enacted at the end of the year of adoption.
For example, a
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