Budget 05: IFRS raises tax fears
Companies face risk of underpaying tax in wake of IFRS.
The move to close loopholes that can be exploited as companies switch to IFRS could result in some companies having underpaid in tax last year.
Last year’s pre-Budget report revealed that the government would defer the tax treatments for transitional adjustments to IAS until 2006 at the earliest.
From 14 December last year, companies that moved to realise a loss in their accounts before the new tax treatments kick in will no longer be able to feel the benefit.
For companies with year end of 31 December that took this step, it is likely to mean tax payments were incorrect for their 2004 figures.