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Corporation tax figure in financial statements

Which corporation tax figure should be included in the financial statements?

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I have prepared a set of accounts for an SME which includes a provision for the corporation tax liability for the financial year.  The accounts are then reported to the parent company and consolidated into Group accounts before being made available to the owners and investors (14% of the companies shares are listed on the stock market).

An external tax specialist prepares the corporation tax computation and disclosures for the financial statements.  This information has been provided one week later than planned.

The parent company are stating that, as the accounts have now been consolidated, no further amendments can be accepted.

As such, should the SME accounts be filed at Companies House containing the provision for corporation tax, so that they reflect the information contained in the Group accounts, or should the actual corporation tax liability be included (and the provision reversed), meaning that the accounts will be inconsistent with the information contained in the Group accounts?



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30th Jan 2019 12:29

The question could have been framed more clearly but I think the gist of it is as follows. The company accounts include a provision for CT which has been reflected in the group accounts.

Subsequent events have shown that there will be an over accrual or under accrual of said CT.

This is not an unusual situation and in my view the difference should be adjusted in the next year. Presumably the accounts were consolidated after signing off by the directors?

Or have I misunderstood the whole question?

Thanks (1)
30th Jan 2019 14:56

Thanks for your reply thomas34.

You have completely grasped what I was getting at. The CT provision was over accrued by £30k , and the accounts had been signed off prior to consolidation (but before receipt of the tax computation).

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to Michael Pemberton
30th Jan 2019 15:11

And no deferred tax effect?

Unless really material I agree with the above that the line of least resistance is to adjust next year.

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