Companies face IFRS tax change

Companies face IFRS tax change

Companies reporting under IFRS will have to file different tax returns next month

Companies reporting under international accounting standards will have to
file different tax returns when the first tax installments are due next month.

Companies have to pay the first tranche of self-assessment tax on July 14,
and companies using the new accounting methods will have different tax
liabilities to those on UK GAAP, PwC has warned.

Gillian Wild, tax director at PwC, said: ‘To date, the focus of IFRS has
remained firmly on the group accounting issues involved. But the tax
implications for individual companies in a group are equally important and
arguably more complex. Despite such complexities, this first tax installment
should be seen as an opportunity to navigate the IFRS maze.’

The tax demand will focus attention on individual subsidiaries rather than
the IFRS impact seen so far at group level. Lease incentives will be one area
that will be affected, Wild said. Though they do not affect the amount of tax
paid overall, they will affect the times at which it is paid.

Lease incentives are just one example of the many accounting changes tax
directors should be aware of which could impact their company’s corporate tax
bill.

‘Others include intangible assets such as intellectual property and goodwill
and finance and treasury issues such as financial instruments. While not all
these adjustments will be reflected in this year’s tax payments, they must still
be addressed in this first tax return period,’ Wild said.

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