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TaxVince
TaxVince, Accountant
Category: UK Tax
Satisfied Customers: 965
Experience:  Chartered Accountant >20 years + Qualified IFA
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I understand that companies can reduce their CT liability by

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I understand that companies can reduce their CT liability by what are known as Deferred Tax Assets. Can you tel me what this means?

MamaTax :

Hi Its MamaTax Here!

Thanks for the question.

MamaTax :

Deferred tax is an accounting concept that has nothing to do with the amount of tax HMRC will charge the company.

MamaTax :

As you may already know, accounting profit and taxable profits are different. Accounting standards allow smoothing the profits by taking into account expected future costs increase or decrease to be taken into account in the accounts of the current period.

MamaTax :

And this is called timing differences and the tax implications of these timing differences is deferred tax.

MamaTax :

There is a whole lot of accounting standards that deal with Deferred tax. However i suggest you go through this summarised explanation HERE and let me know if you have any further comments.

MamaTax :

Regards

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