Wednesday 22 March 1995
Companies' reported earnings could be hit dramatically if plans being considered to change the rules on accounting for tax are adopted.
The changes put forward in Accounting for Tax, published by the Accounting Standards Board last week, would lead to many companies having to make substantial provisions, and see their ability to borrow reduced.
Companies based in Britain now take a "partial provision" approach to tax charges, under which deferred tax is provided for to the extent that it is likely to be payable, taking into account the tax effects of likely future transactions. But American and international standard setters have adopted "full provision" - which requires tax to be fully provided for in accounts.
This has been criticised, as it can lead to the build-up of large liabilities that may not be due for a long time. However, the board favours mitigating this by discounting at the effective rate of a goverment bond.
A third option, "flow through", under which no provision is made for deferred tax, is unlikely to be adopted, chiefly because it creates too much volatility in accounts.
Comments should be sent to the ASB by 16 June.
- 1 Michelle Rodriguez: Fast & Furious actor apologises after telling 'minorities' to stop taking on 'white' roles
- 2 Raif Badawi, the Saudi Arabian blogger sentenced to 1,000 lashes, may now face the death penalty
- 3 PornHub turns masturbation into energy in bid to save the planet
- 4 Robert Mugabe eats a zoo for 'obscene' 91st birthday party
- 5 The remarkable archaeological underwater discovery that could open up a new chapter in the study of European and British prehistory
New theory could prove how life began and disprove God
This is what it's like to be dead, according to a guy who died for a bit
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Ukip would cut billions from Scottish budget to fund English tax cuts
Russia's roadmap for annexing eastern Ukraine 'leaked from Vladimir Putin's office'
Ukraine crisis: Top Chinese diplomat backs Putin and says West should 'abandon zero-sum mentality'
£9 per hour: Recruitment Genius: This role is based within a small family run ...
£28000 - £32000 per annum: Recruitment Genius: This Design and marketing agenc...
£46000 per annum: Recruitment Genius: This property investment firm are lookin...
£18000 - £35000 per annum: Recruitment Genius: This company specialises provid...