Deferred Tax and Tax Reconciliations

What is Deferred Tax? Introduction to the Concept

• Why do we use it?

• Why is deferred tax calculated?

Deferred Tax Under UK GAAP

• General principles

• Permanent differences vs. timing differences

• Introductory examples

Deferred Tax Under IFRS

• General principles

• The tax base of assets

• The tax base of liabilities

• Taxable temporary differences

• Deductible temporary differences

• Initial recognition exemption

• Introductory examples

Recognition of Deferred Tax Assets

• Including dealing with loss carryforwards

Tax Rate Changes & Reconciliations

• Dealing with tax rate changes

• Examples with live tax rates (25%/26.5% from 1 April 2023)

• Tax reconciliations – identifying reconciling items

• Examples – deferred tax and tax reconciliations: Capital allowances – including the 130% super-deduction

• Research and development costs – SME relief and RDEC

• Investment Properties

• Gains rolled over

• Voluntary revaluations

• Interest-free loans

• Loan relationships and derivatives

• Consolidations and business combinations

• Defined benefit pension plans

• Deferred tax share-based payments – differences between deferred tax recognition under UK GAAP and IFRS

Presentation and tax reconciliation disclosures – UK GAAP and IFRS

Training Objectives

Deferred tax training will teach you the following:

• The role of deferred tax in financial statements

• An understanding of when deferred tax is required under UK GAAP and how to calculate it

• Understand how deferred tax is calculated under IFRS, including the effect of the initial recognition exemption

• Identify all reconciling items to produce the tax reconciliations required by UK GAAP and IFRS, including the effect of the 130% deferred tax super deduction introduced by the Finance Act 2021

• How future changes in tax rates affect the deferred tax calculation

Training Course Summary

Redcliffe Training’s deferred tax course is designed to help you understand the basis on which deferred tax is calculated under both UK GAAP (FRS 102) and IFRS (or FRS 101).

By taking this course, you will become an expert in accurately calculating deferred tax assets and liabilities, when deferred tax assets should be recognised in the financial statements, when deferred tax affects the tax expense in the deferred income tax statement and when it is recognised in other comprehensive income or equity.

This deferred tax course will assist tax professionals in preparing or auditing the tax reconciliation required for medium and large companies. This will ensure that the difference between the actual deferred tax expense in the income statement and the product of the deferred tax accounting profit before tax and the statutory tax rate is fully reconciled with no rounding differences or other differences that have not been explained.