FRS 102 ― current and deferred tax

Produced by Tolley in association with

Corporation Tax

Guidance

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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Malcolm Greenbaum

Director and Principal Trainer at Greenbaum Training and Consultancy Limited

Malcolm is a UK Chartered Accountant and Chartered Tax Advisor winning the John Wood Medal in the November 1995 CIOT sitting for the best paper on business taxation. He was previously Director of Finance and Taxation Programmes at BPP Professional Education and has delivered IFRS, US GAAP, UK Tax and VAT training (at all levels from an introduction to the complexities of IAS 39) to a multitude of organisations world-wide since 1992. Malcolm has particular experience in delivering bespoke training programmes to multi-nationals in the financial services, transport and energy sectors as well as delivering UK tax and VAT update programmes to accounting and law firms. He is passionate about training and his enthusiasm ensures that the participants enjoy the learning experience whilst gaining knowledge through their engagement in the sessions and through encouraging them to ask questions and discuss practical issues they may have. Malcolm also provides consultancy services to companies and accounting firms, including provision of VAT advice, reviewing accounting policy manuals and advising on accounting treatments of various transactions. In his spare time, Malcolm enjoys flying having gained a Private Pilot's Licence in 2014.

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