BusinessCompany NewsPBR follow-up: No threat to UK GAAP benefits

PBR follow-up: No threat to UK GAAP benefits

Tax benefits enjoyed by companies under UK GAAP will not be lost when they switch to international financial reporting standards, because of new measures taken by chancellor Gordon Brown.

Pre-Budget special report

Yesterday’s pre-Budget report set in law that international accounting standards will be acceptable for tax purposes, and companies will not have to produce a second set of accounts in UK GAAP for the Inland Revenue. It also laid to rest some of the fears of companies due to switch to tax treatments. The report claims that measures will be introduced to ensure company accounts in IFRS will receive broadly equivalent tax treatments to companies using UK GAAP.

‘Some of the treatments in IAS would have seen companies lose certain tax reliefs,’ said Bill Dodwell, tax partner at Deloitte. ‘The legislation brings welcome changes and are exactly what was thought to be needed.’

The government will ensure that R&D tax rules continue to allow special reliefs and credits, whatever the accounting treatment, and will continue the current tax treatment of most hedging arrangements. It will also amend the corporate debt and derivative contracts legislation to reflect the changes made by IAS39.

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