Home For AAT student members AQ 2013 AAT Level 4 (Level 8 in Scotland)

Help please re deferred tax

Marg22Marg22 Feels At HomeRegistered Posts: 84

Income tax ias 12 could be assessed for dfs. Please could someone explain about deferred tax.

Many thanks



  • peugeotpeugeot Experienced Mentor Registered Posts: 624
    Hi Marg,

    Deferred tax is a provision for future tax consequences. It is not a tax that is actually paid over to HMRC, but is a provision required to achieve the 'accrual's concept of accounting.

    Deferred tax liabilities largely occur where the tax base of non-current assets is lower than their carrying value in the books of the company (in other words the tax authority is consuming the value of the assets much quicker than the entity itself because of 'accelerated' capital allowances).

    I wrote an article on IAS 12 which should help you understand this standard better.

    Good luck for next week

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