PwC podcast: Current developments in tax accounting

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September 2007

Accounting for tax is one of the hottest topics on the agenda at the moment with a number of past, present and future developments causing the heads of finance and tax to look closely at a number of computational and more strategic issues.

Of the issues discussed in the podcast, some that warrant particular attention include:

• experience of the interpretation in relation the US standard which deals with uncertain tax positions (FIN 48);
  
  
• changes that are expected in the international financial reporting standard which governs the majority of tax-related issues is IAS 12 entitled "Income taxes", partly as a result of convergence between IFRS and US GAAP (following a period in which the UK's ASB has sought to converge UK GAAP with IFRS) but in the light of the SEC's movements which would allow foreign private issuers to file IFRS-based financial statements without reconciling them to US GAAP although changes in recognition of uncertain tax provisions are unlikely to follow the FIN 48 model; and
  
  
• Gordon Brown's March 2007 Budget announcements in relation to the phasing out of specific allowances on industrial buildings and qualifying hotels: the phased withdrawal of allowances will not be reflected in financial statements until the 2008 Finance Bill is substantively enacted but the immediate withdrawal of balancing allowances mean there is a particular focus on whether deferred tax is measured on a use basis or a recovery through disposal basis (the fact that balancing adjustments will no longer arise does not mean that the deferred tax liability can necessarily be released under IFRS).