AIA and Deferred tax

[Dain]

Hi I am looking for some help of how to correctly show the deferred tax in my accounts.

Profit is £227

Assets bought £1051
Depreciation is £210

Corporation tax computation AIA claimed was £227 to put profit at £0

As residual balance £824 is written off in small pool write off where do i put the figures in deferred tax?

Thanks

 

[Scalloway]

AIA claimed ......£227
Deprecitaion ....£210
Difference............£17

Tax on £17 @ 20% is £3.40

So you have paid £3.40 less tax than could have.

Dr P&L Tax charge ....£3.40
Cr Deferred Tax ........£3.40

 

[Dain]

Thanks Scalloway

As the residual balance has been written off as it fell below the £1000 limit to write off I have claimed the full £1051 as AIA

In what you advise above am I right to do the following:

AIA claimed £1051
Depreciation £210
Difference £841

Tax on £841 @ 20% is £168.20

Dr P&L Corp Tax £168.20
Cr Deferred Tax £168.20

 

[Scalloway]

Sounds ok to me.

 

[UK Contractor Accountant]

You don't provide for deferred tax if you are preparing Micro Accounts.

 

[Dain]

So if its a small company using FRS102 how would i show this in the accounts?

Or is it just that Trading profit will be £227
Taxabale Profit is £0 after claiming full AIA

What happens to the difference between AIA amount and the profit of £227?

Thanks

 

[Scalloway]

From page 87 here

https://www.frc.org.uk/Our-Work/Pub...The-Financial-Reporting-Standard-applicab.pdf

24.2 This section covers accounting for income tax. It requires a micro-entity to recognise the current tax consequences of transactions and other events that have been recognised in the financial statements. Current tax is tax payable (refundable) in respect of the taxable profit (tax loss) for the current period or past reporting periods. This section prohibits the recognition of deferred tax which represents the future tax consequences of transactions and events recognised in the financial statements of the current and previous periods.

So deferred tax does not apply for micro entities.