Steve Collings FCCA looks at how to account for current and deferred taxes, highlighting the impact of recent changes to the UK tax regime, including the130% super deduction allowance
FRS 102:29.3 requires an entity to recognise a current tax liability for tax payable on the entity’s profits for the current and past periods. A prepayment (ie, an asset) may be recognised in respect of amounts of tax already paid which exceed the amount due for the current and previous periods, provided that the asset can be recovered. Keep in mind that assets cannot be stated in the balance sheet in excess of the recoverable amount.
Losses carried back
FRS 102:29.4 allows an entity to recognise a current tax asset for the benefit of a tax loss which can be carried back to a previous accounting period in order to recover tax that has been paid in a previous period (a loss carry back).
