CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. The UK's ASB Insists That Deferred Tax Should Be Accounted For

The UK's ASB Insists That Deferred Tax Should Be Accounted For

Jason Gorringe, Tax-news.com, London

13 December 2000


Sir David Tweedie, chairman of the UK's Accounting Standards Board, is about to retire, but he is not going without a firework display of new rules and standards which tidies up his desk.

The latest of these is a rule published by the ASB last week which requires deferred tax to be offset against reported assets even if a company believes that it will be negated by future investment allowances. The practice of ignoring such deferred liabilities has been standard in the UK for many years, but most other countries now use the tighter standard, and the UK has little choice but to fall in line.

One of Sir David's greatest achievements has indeed been to fight for international accounting standardisation, and he has played a large part in reducing what was 20 years ago a bewildering patchwork of conflicting and contradictory accounting regimes into something which is recognisably the same across most leading economies.

The change will be difficult, though. Sir David said last week when introducing it: 'This one is going to hurt'.

The change doesn't have any effect on cash-flows, and the ASB is allowing companies to discount the future liabilities to the present, which helps, but even so many large companies may see net asset value per share cut by 20% or more. The ASB says that it doesn't know of any large company which will be unable to pay normal dividends as a result of the change (dividends have to paid from positive reserves), and theoretically at least, share prices should be unaffected, as long as analysts and investors take the change into consideration when they compare balance sheets.

The ASB said that companies with large capital spending programmes would be most affected, such as British Airways, Railtrack and Amoco.

.

To see today's news, click here.

 















Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »



Stay Updated

Please enter your email address to join the Tax-News.com mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.


To manage your mailing list preferences, please click here »