deffered tax

That’s a big ask, as football team managers would say!

Basically, no! “and all adjustments relating to it” is too much for you to expect

I can tell you what deferred tax is in principle (but it’s explained in the course notes)

Companies prepare financial statements following the fundamental accounting concepts, one of which is the accruals or matching concept.

The taxman will follow the rules as laid down in successive Treasury Acts of Parliament and those rules often prescribe that income for tax purposes should be calculated on a “receipts” basis and expenses on a “cash paid basis”

Apparently the taxman doesn’t like accruals based figures (or Parliament doesn’t understand accrual and prepayments!)

Similarly, where a company may depreciate its assets over whatever period of time the company chooses, the taxman says “No! We shall apply a standard rate of capital allowance (the taxman’s version of depreciation) and allow deductions from your profits in accordance with our standardised rates of capital allowances”

For the above two reasons, there arise timing differences where a company will for example accrue an expense related to this year but not payable until next year and the accounting profit is therefore lower than the taxman’s version of taxable profits

Timing differences could be permanent or temporary. Only the temporary ones will reverse and its these temporary timing differences that will reverse in the future that cause the need to calculate the deferred tax position

OK?

If you want more, work through the free course notes examples on this site (very easy) and then check out the exam standard questions (I’m not sure of the names but I think Cesare is one)

Check out the pilot paper question Kesare – that’s probably about as hard as it gets