Introduction

FRS 102 requires a note to the financial statements that reconcile:

1. •

   the total tax expense (income) included in profit or loss, and

2. •

   the profit or loss on ordinary activities before tax multiplied by the ‘applicable tax rate’

FRS 102, s 29.27(b)

This allows users to understand the reasons why the actual tax expense is not equal to the profit before tax figure multiplied by the corporation tax rate in force at the reporting date.

‘Applicable tax rate’ is not defined by FRS 102. The same phrase is, however, used in International Financial Reporting Standard IAS 12 [IAS 12.85] and there would seem to be a choice of using the domestic (ie UK) rate of tax or