FRC to Improve Income Tax Reporting
The Financial Reporting Council’s Accounting Standards Board (ASB) and the European Financial Reporting Advisory Group (EFRAG) have published a paper looking at ways to improve the financial reporting of income tax.
The discussion document examines how the usefulness of information prepared in accordance with IAS 12 Income Taxes could be enhanced, which ASB says is in response to concerns that the current standard is cumbersome and difficult to understand and apply in practice.
In particular, the paper discusses possible changes to the reconciliation of tax expense to a standard rate; revisions to the requirements in respect of uncertain tax positions; and whether deferred tax should be discounted.
The paper also discusses several alternative approaches that could form the basis for a new accounting standard that would replace IAS 12.
These are the flow-through approach (under which only the tax payable on taxable income for the period is reported as an expense); the partial allocation approach (under which only those tax effects likely to affect the tax payable for future periods is deferred); the valuation adjustment approach (under which tax effects are dealt with as part of the carrying amount of related assets and liabilities); and the accruals approach (under which the tax effect of all transactions are recognised and allocated to the period to which they relate).
The discussion paper is open for comment until 29 June 2012.
- London Grocer Found Guilty in £120k VAT Fraud
- HMRC Enquiring English Premier League Clubs and Players Over Potential Tax Avoidance on Sale of Players’ Image Rights
- VAT Fraud Leads Father and Son Duo to Jail
- Mechanic Ordered to Pay Back £208k with Respect to a Tax Fraud
- Large Businesses Tax underpayments increases by 13% to £25bn
- OECD Releases Compliance Ratings on Tax Transparency
- LITRG urges to Act Fast on Missed Tax Credit Renewals