Tax accounting - IFRS

Overview

This is a Quick Reference Guide (QRG) to provide you with an overall understanding of the IFRS tax accounting sheets and how these sheets can help you calculate the tax figures for your accounts.

The tax accounting sheets gather and analyse the information from the tax computation and calculate your permanent and temporary differences for the period and opening and closing balance sheet figures for current and deferred tax. These figures then feed into the Tax account and Accounts disclosures sheets, which provide the figures to populate the tax notes in your accounts.

The IFRS tax accounting sheets are developed by selecting Insert > Insert sheet > Tax account – IFRS
.

You can have both the FRS102 and IFRS tax accounting sheets in your file if required.

Completing the Sheets

The Tax account and the Accounts disclosures sheets form the basis for your tax figures in your accounts. The other supporting tax accounting sheets are populated with information from the tax computation and further work, and analysis can be performed in these tax accounting sheets to ensure the correct figures flow through into the Tax account and Accounts disclosures sheets. It is therefore suggested that you review and complete the other tax accounting sheets first before returning to review the Tax account and Accounts disclosures sheets.

This Quick Reference Guide aims to provide a walkthrough of the tax accounting sheets in the order in which we would generally expect them to be populated. However, this is not prescriptive, and the order you choose may vary depending on your requirements.

Tax basis balance Sheet

The Tax basis balance sheet is the starting point for tax accounting under IFRS. The idea is that you should replicate your balance sheet on this sheet and use this as the starting point for your tax accounting calculations. However, you can enter as much or as little information onto this sheet as you think is required for your calculations. You can insert rows in each section.

The main part of the Tax basis balance sheet is data entry so that you can follow the layout/headings of your accounts on a line-by-line basis.

Any brought forward or carried forward accounts or tax values present in the tax computation will be linked through to the bottom of the Tax basis balance sheet as suggestions as to what the carrying amount or tax base should be for these items. The Revised opening position per computation
and Closing position
amounts must be populated for each period. The Opening per accounts
column need to be populated in the first year of using the tax accounting sheets, but on roll forward to the subsequent period, these columns will be automatically populated.

note

If you have any non-qualifying tangible or intangible assets, you should analyse these on either the Tangible fixed asset analysis or Intangible fixed asset analysis sheets as appropriate first, so that the suggested values on the Tax basis balance sheet are correctly identified as either qualifying or non-qualifying. This will help you when completing this sheet. This guide provides more detail on the fixed asset and intangible fixed asset sheets later.

A check error reconciles the amounts entered on the Tax basis balance sheet to the values brought through from the tax computation at the bottom of the sheet. If you use the suggested values to populate your tax basis balance sheet, the check error will disappear when all the amounts are entered and are the same. However, if the tax base of an item is different to what is held in the tax computation (i.e. an asset is perhaps held for sale rather than use, and therefore has a different tax base to its TWDV) You must use the data entry rows in the bottom section to adjust for this.

note

You need to switch the selector Show data entry rows
in this section to Yes
to see these data entry rows.

Temporary differences

This sheet links through the opening and closing balances for the temporary difference balances (after the initial recognition exemption) from the Tax basis balance sheet.

Each row has a default Disclosure note caption
, but if you want to override how the temporary difference is categorised in the accounts, you can use the selector on the right hand side to choose a different category. The IFRS - Tax rates and options sheet explains how you can change the wording of the disclosure note captions if required.

Most temporary differences are recognised in the income statement by default. If there are temporary differences that should be recognised in equity or OCI, you can manually enter these amounts in the columns provided. The columns are hidden by default, but you can show them by changing the selectors at the bottom of the sheet to display the Equity rows/columns
or OCI rows/columns
.

If you have temporary differences that you do not want to recognise, you can do this by entering the amount that should not be recognised into the relevant Not recognised
column(s).

If you have a transfer of trade in the period, you can use the display Transfer of trade columns
selector to show the transfer of trade columns and allocate temporary differences to these columns as appropriate. Additionally, if any temporary differences should be allocated to goodwill, you can switching the selector for displaying Goodwill
to Yes
, then enter these in the Goodwill
column.

Tangible Fixed Asset Analysis

This sheet links through the figures from the Tangible fixed asset note in the computation. If all the tangible fixed assets qualify for capital allowances, no further work is required on this sheet. If you have assets that do not qualify for capital allowances, these need to be analysed separately to remove them from the Qualifying assets
column. Items not qualifying for capital allowances can be entered in the Non-qualifying assets
column. Most figures in that column will be populated automatically from the tax computation. However some figures, such as non-qualifying depreciation (which cannot be picked up directly from the tax computation), must be entered manually.

If there are other types of assets in the tax computation that could affect the qualifying assets figures (for example, Capitalised revenue expenditure or Short lease premiums), further columns for these amounts will be inserted automatically. Please note there is a supporting tax accounting sheet for short lease premiums that need to be developed and completed if you have short lease premiums in your tax computation. The application will advise you if you need to develop this sheet.

There is a separate sheet available to help calculate potential capital gains temporary differences in relation to Structures and buildings allowances, the SBA capital gains temporary differences sheet.

The qualifying and non-qualifying totals from this sheet will post to the bottom of the Tax basis balance sheet.

There are two sections on the Tangible fixed asset analysis sheet. The first section, Analysis for tax accounting
, analyses the split between items qualifying for capital allowances and the items not qualifying for capital allowances for the purposes of calculating the fixed asset temporary differences. Once the tax accounting figures are finalised, the figures on this sheet can be frozen so they do not keep changing if the analysis of qualifying and non-qualifying assets changes in the final tax computation. See "Freezing the Tax Accounting Sheets" section for more information.

The Analysis for final tax computation
section analyses the split between items qualifying for capital allowances and the items not qualifying for capital allowances at the final tax computation stage. These figures are not frozen when you freeze the tax accounting sheets, so they do change if the analysis between qualifying and non-qualifying assets changes. The Closing NBV per computation
figures therefore become the Opening NBV per computation
for the following period, and the difference between these figures and the Opening NBV per accounts
figures help calculate your prior year adjustment figures. Any manual entries that were made at the tax accounting stage (such as non-qualifying depreciation) will need to be reviewed again and updated as appropriate in the Analysis for final tax computation
section to ensure these entries are still appropriate.

note

If figures in your computation have changed since tax accounting stage (for example, additions/disposals not qualifying for capital allowances), a selector will appear at the bottom of the sheet to suggest that you review the manual entries in the Analysis for final tax computation
section again.

Any changes to the allocation of depreciation between qualifying and non-qualifying assets will feed directly to the Prior year adjustment sheet.

This sheet also lets you adjust for assets capitalised in this period but qualifying in a different period . The column is hidden by default but can be shown using the selector at the bottom of the sheet.

Net temporary differences

This sheet takes the balances from the Temporary differences sheet and uses the relevant tax rates to calculate the deferred tax balances that feed into the Accounts disclosures and Tax account sheets. The default tax rates used to calculate the temporary differences for the sheet can be overridden by changing the relevant tax rate on the IFRS – Tax rates and options sheet. Alternatively, a rate can be changed on a line by line basis, if required, by changing the relevant rate on the right-hand side of the sheet.

Comparison of CT and DT movements through I/S

This sheet compares the current tax movement through the income statement as per the Adjustment of profit sheet, and compares it to the deferred tax movement through the Temporary differences sheet. Any differences between the current and deferred tax movements are taken to the Proof of tax sheet where further analysis takes place.

Each of the Adjustment of profit
items (current tax) are automatically allocated to a column on this sheet (such as Expenses not deductible
, Temporary differences – trading
etc.). The allocations of these amounts are fixed at this stage to ensure a meaningful comparison between the current tax movement with the associated deferred tax movement. As such, there is therefore no option to reallocate amounts between columns on this sheet. Generally, there should be limited data entry or user input on this sheet. Further work in relation to how the reconciling items should be disclosed in the accounts can be done on the Proof of tax sheet.

Current period pension contributions to Other comprehensive income flow from the Defined benefit pensions
sheet to the Comparison of CT and DT movements
sheet and are adjusted for to ensure they aren't included in the reconciling items for the Proof of tax. An error will show on the Proof of Tax
sheet until you allocate the tax effected amount of the OCI pension contributions to the OCI column
on the Tax account in the current tax section.

Proof of tax

Any differences between the current and deferred tax movements are reconciling items, and the total reconciling items from each column on the Comparison of CT and DT movements through I/S sheet link through to the Proof of tax sheet. Proof of tax aims to provide as much granularity as possible in relation to each reconciling item.

There will be other proof of tax items that do not affect the adjustment of profit, and therefore are not captured on the Comparison of CT and DT movements through I/S sheet, such as tax rate changes, group relief, prior year adjustments etc. These are also included on the Proof of tax sheet.

The column headings and allocations on the Proof of tax sheet determine the disclosure in the total tax reconciliation on the Accounts disclosures sheet. There are a standard set of column headings that you can use for the disclosure captions, and you can reallocate items between the columns to get the disclosures you require. See the "IFRS - Tax Rates and Options Sheet" section for information on changing the column headings, if required.

Tax Account

This sheet details the movement between opening and closing balances for corporation tax debtors and creditors and deferred tax assets and liabilities.

The current tax part of this sheet is split into four sections:

Corporation tax payable

Tax credits and charges

Foreign tax payable

Payments for intercompany balances

The latter three sections are hidden by default unless they have figures in them. You can display these sections using the selectors at the bottom of the sheet. For these sections you will need to enter the Opening per accounts
and Opening per computation
in the first year of using the tax accounting sheets. On roll forward the Opening per accounts
figures will be populated, but you may need to enter the Opening per computation
figures.

Current tax – corporation tax payable: In the first period of using the tax accounting sheets you will need to enter your Opening per accounts
and Opening per computation
figures. On roll forward these will be populated automatically for you.; There are columns to allocate current tax amounts to equity or OCI as appropriate. These columns are hidden by default, but you can sow them by changing the selectors at the bottom of the sheets, Show equity column
or Show OCI column
.; If you use the Tax payments and interest sheet in the tax computation, the amounts entered on that sheet automatically flow through to the Tax creditor sheet, and then into the Tax account. Otherwise amounts must be entered manually on the Tax creditor sheet.
Current tax – tax credits: The Tax account sheet links through figures for tax credits, levies, and surcharges included in your tax computation. Any reconciling items in relation to these are automatically posted to the Proof of tax sheet. Data entry rows let you enter amounts for any other credits or levies as required.
Current tax – foreign tax payable: Foreign tax suffered
and Foreign tax relieved
amounts will be linked through from the tax computation to the bottom of the Tax account sheet. The total of these sections (manual adjustments can be made if necessary) then link through into the Foreign tax payable
section in the Tax account and the Proof of tax as appropriate.; note
If you have any unrelieved foreign tax suffered brought forward from previous periods, you will need to use the Less unrelieved foreign tax b/f (-)
row to remove this from the current year income tax charge.
Payments for intercompany balances: Amounts charged or credited to the income statement in relation to payments made or received for group relief/other intercompany balances can either be entered directly in the Charged (+) / credited (-) to income statement
column or you can develop the Group relief and other payments account sheet for more functionality in respect of group relief. More information on this sheet is included below.; note
These are the amounts charged or credited to income statement in respect of the group relief payments and should follow the signage of the column heading. The amounts actually paid or received should be entered in the Tax payments (-) / receipts (+)
column and should follow that signage (which corresponds to the sign convention on the row).
Deferred tax: Deferred tax opening, closing, and movement in the period figures link through from the Net temporary differences sheet. Amounts allocated to equity or OCI on the Temporary differences sheet should also pull through directly from the Net temporary differences sheet. The categories for deferred tax correspond to the disclosure captions on the IFRS - Tax rates and options sheet.; note
The prior year adjustments on this sheet for both current and deferred tax will be fully analysed on the Prior year adjustment sheet in the prior period tax accounting sheets, so you can ensure you are clear on what these prior year adjustments relate to.

Tax Creditor Calculation

This sheet helps calculate your current period tax creditor position. If you have populated the Tax payments and interest sheet in the tax computation, any tax payments or receipts will flow automatically onto this sheet. Otherwise you can enter them manually. Payments made after the period of account end will be carried forward to the following period.

The sheet will also keep track of the closing current tax position per the tax computation so on roll forward it calculates and populates the correct opening per computation figure for that period and any resulting prior period adjustments.

Account Disclosures

This sheet extracts information from the other tax accounting sheets and populates the tax accounting disclosures for you. Limited data entry should be required on this sheet, aside from where some judgement is required. (For example, disclosing deferred tax balances payable or recoverable within 12 months or after 12 months, netting of deferred tax assets/liabilities).

The tax on profit on ordinary activities is split into current and deferred tax as per the tax note in the accounts. Amounts charged or credited to equity and OCI are disclosed separately to the income statement amounts.

The total tax charge reconciliation is populated based on the disclosure column headings used on the Proof of tax sheet. If you would like to review the effective tax rate reconciliation, you can change the selector Display effective tax rate reconciliation
to Yes
at the bottom of the sheet.

The disclosures show the Deferred tax (assets)/ liability movement from opening to closing, and a breakdown of the closing balances between the different categories of deferred tax, such as fixed assets, temporary differences – trading, etc. It is assumed, by default, that all balances are payable or recoverable within 12 months, but you can reallocate those amounts to after 12 months if required. You can also manually provide details of where deferred tax assets and liabilities have been offset.

The disclosures also provide details of amounts not recognised, based on the amounts not recognised on the Temporary differences sheet.

Movement in Deferred Tax (assets)/liabilities

This sheet forms part of the accounts disclosures required under IFRS, and summarises the deferred tax movement from opening to closing per category of temporary difference. Limited data entry should be required on this sheet; however, in the first period of using the sheet you will need to enter the prior period figures, or change the selector Check provision at start of period to provision at end of prior period
to No
.

If you have made manual adjustments on the Tax account or Accounts disclosures sheets, these may need to also be reflected on this sheet.

Freezing the Tax Accounting Sheets

Once you have reviewed the Accounts disclosures sheet and you are happy that the tax accounting figures are final, you can change the Freeze the tax accounting sheets?
selector to Yes
on the IFRS - Tax rates and options sheet. This means the tax accounting figures will not change, even if the tax computation figures change when you are continuing to work on the file for your tax return figures.

If you freeze the tax accounting sheets and then realise you need to go back and change something, you can change the Freeze the tax accounting sheets?
selector back to No
again to unfreeze the sheets.

note

If between freezing the tax accounting sheets and unfreezing them you made several changes to the tax computation, these changes may not be reflected in the tax accounting sheets when you unfreeze them. You may need to make some manual adjustments.

Prior Year Adjustment Calculation

Once you have frozen your tax accounting sheets and you carry on working on the tax computation, you will see that the Prior year adjustment calculation sheet calculates any differences between the Tax accounting figures
and the Final computation figures
, and allocates that difference to a disclosure column (which can be reallocated to a different column if required). This sheet then affects these differences and provides a breakdown of the current and deferred tax prior year adjustment figures, which should match (and provide a detailed breakdown of) the prior year adjustment figures calculated on roll forward in the subsequent period file.

Any change to depreciation or amortisation between qualifying and non-qualifying should pull through automatically to this sheet from the Fixed asset analysis or Intangible fixed asset analysis sheets.

IFRS - Tax Rates and Options Sheet

This sheet provides details of the tax rates used in the tax accounting calculations, which can be overridden if required.

You can also override the standard disclosure captions for the reconciling items on the Proof of tax sheet or the deferred tax categories on the Accounts disclosures sheet. To see the standard disclosure narrative options, you need to switch the selector Show disclosure narrative options
to Yes
.

If you want to change these standard narrative options you need to perform the following steps:

Insert a line item for the new narrative you require. To do this go to Configuration > Line items
, then under Sheet
choose IFRS – tax rates and options
.

Under Category
select Categories for reconciling items
or Categories for deferred tax
.

In the Description
column, type the new narrative.

In the Row display
column, type how you want that to display on a row. This will generally be the same as the description column.

In the Column display
column, select how you want it to display as a column heading. This is more relevant if the narrative is quite long, as you may need to wrap the text. You can do this by adding tildes. For example, Non deductible~permanent~items
would to split this heading onto three rows.

If you use the group consolidation tool, the group tax accounting sheets will highlight if there are any inconsistencies between disclosure narrative captions used in the underlying entity computations.

Developable Sheets

IFRS Group relief and other payments account and Group relief creditor calculation

These sheets are optional and can be developed by selecting Insert > Insert sheet > IFRS Group relief and other payments account. The two sheets are developed in together.

Group relief creditor calculation

This sheet automatically calculates the group relief charge or credit based on the losses claimed or surrendered in the tax computation and the current year tax rate. You can override the rate if the company pays or receives at a different tax rate. Adjustments can also be made to the overall group relief charge/credit as well, if required. The group relief income statement charge or credit will be posted to the Income Statement
column on the Group relief and other payments account sheet on the current period row. Group relief payments and receipts entered on the Group relief creditor calculation sheet are also posted to the Payments (-)/ receipts (+)
column on the Group relief and other payments account sheet.

The figures in the Per accounts
column on the Group relief creditor calculation sheet are frozen when the tax accounting sheets are frozen. The Per computation
column will continue to be updated if any of the figures group relief figures change between the tax accounting and tax computation stage. This sheet calculates the closing group relief creditor/debtor for both the accounts and computation purposes, which means on roll forward any differences (prior year adjustments) are calculated automatically for you.

If you are using the group module to allocate payments or receipts for group relief, then you should not enter any amounts into the entity file on the Group relief payments (-) / receipts (+)
row, as these figures will be pushed down from group. If you have already entered amounts on this row, then use the group module, you will have an error in the group module saying the figures in the group module and the entity file do not match.

To reset the formula and allow the group to push down the value from the group module, right-click on the cell in the entity file and select Tools > Reset to template cell
.

You can use the Group relief and other payments account sheet to analyse group relief payments and receipts and other intercompany balances between different periods of account.

Journal Entries

This sheet can be developed by selecting Insert > Insert sheet > IFRS Journal entries
.

The sheet uses the figures from the Tax account and Accounts disclosures sheets to provide journal entries for the Current Tax – current and prior periods and also Deferred Tax – current and prior periods.

Intangible Fixed Asset Analysis

The Intangible fixed asset analysis is only required if there are intangible fixed assets in the computation. A warning will appear if the IFA accounts note has been developed into the tax computation and you have not developed the Intangible fixed assets analysis sheet. This sheet can be developed by selecting Insert > Insert sheet > IFRS IFA analysis
.

All information entered in the IFA accounts note in the accounts are linked through to the Total
column on this sheet. If you have relevant or excluded assets, columns will be inserted automatically onto this sheet to remove these amounts from the Qualifying assets
column. You can also use the data entry columns for any other adjustments if required.

The qualifying and non-qualifying totals from this sheet will post to the bottom of the Tax basis balance sheet.

As with the fixed assets equivalent sheet, there are two sections on this sheet. The first section, Analysis for tax accounting
, analyses the split between items qualifying for intangible fixed asset allowances and the items not qualifying for allowances. Once the tax accounting figures are finalised, these figures can be frozen so they do not keep changing if the analysis of qualifying and non-qualifying intangible assets changes between the tax accounting stage and the final tax computation stage. See the "Freezing the tax accounting sheets" section for more information.

The Analysis for final tax computation
also analyses the split between items qualifying for intangible fixed asset allowances and the items not qualifying for capital allowances, but this section reflects the position at the final tax computation stage. The Closing NBV per computation
figures therefore become the Opening NBV per computation
for the following period and the difference between these figures and the Opening NBV per accounts
figures help calculate your prior year adjustment figures. Any changes to amortisation between qualifying and non-qualifying assets will be posted directly to the Prior year adjustment sheet.

RDEC Temporary Differences

You will be prompted to develop this sheet if you have the RDEC computation sheets in your tax computation. This sheet can be developed by selecting Insert > Insert sheet > IFRS RDEC temporary differences
.

This sheet tracks the temporary differences arising on your RDEC step 2 and step 3 amounts, which are linked directly through from your tax computation. You can choose whether you want to recognise or not recognise the temporary differences on this sheet. Any resulting temporary differences will link through to the bottom of the Net temporary differences sheet and then flow to the Tax account sheet.

There is a Prior period RDEC adjustment
column on the Tax account sheet for prior year adjustments in respect of RDEC temporary differences. Any deferred tax prior year adjustments will be automatically populated in this column. If you want these to be recognised in the income statement, you can reallocate these amounts manually to the Prior period charge (+)/ credit (-) column
.

Short lease premiums

You will be prompted to develop this sheet if you have short lease premiums in your tax computation. This sheet can be developed by selecting Insert > Insert sheet > IFRS Short lease premiums
.

A column for each short lease premium is inserted on this sheet and the amounts for Original premium
and Amounts chargeable on lessor
are linked through from the Short lease premium computation sheet.

You need to populate the accounts values for each short lease premium such as NBV b/f, additions, disposals, depreciation etc. The sheet uses these NBV figures and the short lease premium amounts pulled through from the tax computation to calculate the ineligible amounts in respect of short lease premiums. The ineligible amounts are automatically linked through to the Fixed asset analysis sheet and adjust the qualifying NBV for the purposes of calculating the tangible fixed asset temporary differences. The relevant qualifying amounts from the Short lease premium computation sheet link through directly to the Tangible fixed assets realised through use sheet in order to calculate the overall fixed asset temporary differences balance.

SBA capital gains temporary differences

This sheet can be developed by selecting Insert > Insert sheet > IFRS SBA capital gains temporary differences
.

This sheet is designed to calculate temporary differences arising on any potential capital gains or losses in respect of structures and buildings.

All structures and buildings entered on the Structures and buildings allowances computation sheet will flow automatically to this sheet. It will also pick up the cumulative SBAs claimed and base cost for each asset.

If you want to calculate the potential temporary difference for an asset, you should check the Calculate capital gain/loss
selector.

Once the net book value and any other relevant amounts are entered manually, the sheet will perform a basic capital gain calculation to calculate the temporary difference arising on each asset. You will need to manually enter the amount you would like to be included in the Tax basis balance sheet.

Any calculations in respect of deferred tax not recognised on the SBA capital gains temporary differences sheet should be done on the Temporary differences sheet. You should enter the full amount of the potential temporary difference on the Tax basis balance sheet, then enter the relevant not recognised amounts on the Temporary differences sheet, as with other temporary differences. This ensures the deferred tax not recognised figures are included correctly on the Accounts disclosures sheet.

Printing

To print your tax accounting calculations, use the Print
button and then choose Print calculation
. Under Sheets
you can either choose the Tax account
option, or you can choose Selected
option under Sheets
, then manually select the sheets you want to print. For printing in final we suggest you use the In use only
option under Print Layout
.

This article applies to:

PRODUCT: ONESOURCE Corporate Tax

Solutions by Industry

Tax accounting - IFRS

Overview

Completing the Sheets

Freezing the Tax Accounting Sheets

Developable Sheets

Printing

This article applies to: