RegulationAccounting StandardsTaxman examines implications of fair value rules

Taxman examines implications of fair value rules

HMRC releases discussion paper on fair value rules

HM Revenue and Customs is examining the tax implications of new international
fair value rules released in the wake of the crisis.

The new rules, released by the International Accounting Standards Board in
November 2009, allow companies to value their assets at either fair value or
cost.

The accounting standards have not yet been absorbed into European law,
however, in anticipation of their eventual adoption, HMRC is now examining their
relationship with tax provisions.

The fair value model ravaged banks balance sheets in the crisis as asset
prices plummeted in falling markets. Banks were forced to measure their
loan-books at depressed market prices, which obliterated much of their
balance-sheet value. The new rules were released under pressure from Europe
following the crisis.

HMRC’s largely technical discussion paper is the third released on the
subject ahead of a meeting on 1 October. HMRC is appealing for feedback on the
issue.

Further Reading:

HSBC
finance chief rails against US fair value rule

IAS
39 Working Group meeting:

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