The following Corporation Tax guidance note Produced by Tolley in association with Malcolm Greenbaum provides comprehensive and up to date tax information covering:
An entity must present changes in a current tax liability (or asset) and changes in a deferred tax liability (or asset) as a tax expense (or income). The exception is for those changes arising on the initial recognition of a business combination which must be dealt with in accordance with FRS 102, s 29.11. See the FRS 102 ― specific deferred tax issues guidance note for further information.
An entity must present the tax expense (or income) in the same component of total comprehensive income (ie continuing or discontinued operations, and profit or loss, or other comprehensive income) or equity as the transaction or other event that resulted in the tax expense (or income).
Deferred tax liabilities must be presented within ‘provisions for liabilities’ in the balance sheet. Deferred tax assets must be presented within debtors.
Offsetting is the netting of assets and liabilities into the presentation of a single net figure in the accounts.
An entity must offset when, but only when, there is a legally enforceable right of set off (ie the tax law provides for setting off, for example when group relieving losses against taxable profits) and the reporting entity either intends:
to settle on a net basis, or
to realise the asset and settle the liability simultaneously
FRS 102, s 29.24
In practice it is difficult to realise a tax asset and settle a tax liability simultaneously, so the intention to settle on a net basis is key here.
If the assets and liabilities arise in different tax jurisdictions, or within entities where losses cannot be surrendered, nor tax payments made on a group basis, then offsetting of current tax assets and liabilities will not be possible.
An entity must offset when, and only when:
there is a legally enforceable right to set off the current tax assets and liabi
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