FRS 102 ― current and deferred tax

Produced by Tolley in association with Steve Collings
Corporation Tax
Guidance

FRS 102 ― current and deferred tax

Produced by Tolley in association with Steve Collings
Corporation Tax
Guidance
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Introduction

FRS 102, s 29 sets out the recognition, measurement, presentation and disclosure requirements for both current and deferred tax. The section also includes accounting requirements for VAT and similar taxes which are not based on income, although the focus of this guidance note is direct taxes.

The recognition of current tax is generally very straightforward being based on the taxable profit for the period.

Deferred tax under FRS 102 is based on a timing difference ‘plus’ approach. This includes items included in ‘profit before tax’ but is also extended to other comprehensive income, which includes profit before tax plus other gains and losses recognised outside the income statement. These may include revaluation gains on property recognised under the revaluation model. FRS 102 requires deferred tax to be recognised on such gains even where there is not a binding contract to sell the property.

Deferred tax must also be recognised on fair value adjustments arising out of a business combination (where the acquirer obtains control of another business). Deferred tax recognised on

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