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 retains the ‘timing difference’ concept from FRS 15 under old UK GAAP, but its application is extended from profit before tax to ‘comprehensive income’, which includes profit before tax plus other gains and losses recognised outside the income statement. These may include revaluation gains on property treated 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). This is sometimes referred to as a ‘timing
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