A question on the general background to and meaning of deferred tax came in from my old friend Maggie. Here is a summary of what I have found. Firstly, a definition of deferred tax A liability that results from income that has already been earned for accounting purposes but not for tax purposes. From the ASB in the UK, a very useful summary of FRS 19 FRS19 has replaced SSAP 15 and here is an ASB summary of the status of SSAP15 A PDF document from a BOC annual report that has a brief word on how they deal with deferred tax in their accounts. Also from BOC All UK companies must adopt this new standard for accounting periods ending on or after 23 January 2002. Under the previous accounting standard, SSAP15, no provision was required for deferred tax that was unlikely to become payable in the foreseeable future. Under FRS19, provision must be made for deferred tax no matter how remote the likely payment date or the extent to which payment may be continually deferred by future investment decisions or transactions of the Group. Within BOC, tax is deferred mainly as a result of accelerated tax depreciation of capital investments. The effect of applying FRS19 alone in 2001 would have been to raise the underlying tax charge by approximately 6 per cent. Some indication of what is important about deferred tax taken from an advertisement for a Deferred Tax seminar: Tax in Company Accounts With the Emphasis on Deferred Tax Of particular interest to all involved in preparing or understanding the taxation entries in statutory accounts. The course will review the UK corporate tax system, including recent major changes, and their implications for accounting and disclosure requirements. Deferred tax is very much in the news with the change to full provision now being mandatory. Coverage will include a detailed review of the new Accounting Standard and its impact on different corporate sectors, including the effect on dividend cover, banking covenants, past acquisitions and the pros and cons of discounting. Programme • The UK corporate tax regime and recent major changes • FRS16 - Tax in Company Accounts • FRS19 - Accounting for Deferred Tax • The impact of the change from 'partial' to 'full' provision • Implementation • Quantifying the prior period adjustment • Revisiting past acquisitions • Discounting the deferred tax • Case studies Very useful notes from AccountingWEB entitled FRS 19 - Deferred tax: Appendix 1 (Notes to the Accounts) and this from the same source: FRS 19 – Deferred tax Solomon Hare gives expert guidance on FRS 19 – Deferred tax. There's a Word document to download from there too. Here'a an article from the ACCA on FRS 19 Deferred Tax by Paul Robins: it was published on 1 March 2001 so be careful just in case it's a bit out of date. That should be useful everyone. DW