Deferred Tax Liability

kim_cleminson MAAT, AAT Licensed Accountant Posts: 5

I have recently started working for a limited company, and have taken over the accounts from another accoutnancy firm.

Within the accounts is a provision for deferred tax liability, although this is something new for me to actually work on, I do understand the concept of the calculation with regards to depreciation and AIA and the difference this will have on the accounts balance versus the tax liability etc.

However, the workings I have recieved from the accountants are confusing me. They have included a tax reconciliation calculation which has a starting figure labelled "Accounts Profit" - I have no idea where this figure has come from, I cannot get it to add up from any of the figures in the accounts. Is this something simple I should know??

Also, this year the NBV has actually reduced compared with last year, in previous years it appears all assets have been claimed under the AIA or not at all as they are non-qualifying. Therefore there isnt at TWDV currently.
If the NBV has decreased, surely that means the deferred tax provision will also?

I'm sorry, I'm sure this is a calculation I should know and be able to perform competently. But to be honest I have spent hours on end trying to get my head around it to no avail.
The accounts are prepared and this is the only thing holding me up!

Is there anyone who can help me, I would be very grateful - Thank you


  • hal978
    hal978 MAAT, AAT Licensed Accountant Posts: 197 Dedicated contributor ? ? ?
    Which financial reporting framework? If it is FRS 105, you can't recognise deferred tax at all.
  • kim_cleminson
    kim_cleminson MAAT, AAT Licensed Accountant Posts: 5
    Sorry I should have made that clear - it is FRS 102

    The previous accountant was very helpful today and explained their workings they provided were incorrect and that explains why I was struggling so much.

    I have finalised the accounts now - thank goodness!
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