Annual Report 2012 - Cadogan

NOTES ON THE FINANCIAL STATEMENTS 31 DECEMBER 2012
8 taxation (continued)
(b) Factors affecting tax charge for the year
The tax charge for the current year is lower than the current standard rate of
corporation tax in the UK of 24.5% (2011 – 26.5%). The difference is explained
as follows:
Standard tax rate
Actual current tax rate
Difference
2012 2011
% %
25 27
15 14
(10) (13)
Explained by:
Effect of rollover relief and indexation allowance on taxable profits
on property disposals.
Capital allowances in excess of depreciation
Non-taxable write back of provision for diminution in value of
investment properties
Sundry permanent differences
Adjustment to tax in respect of prior periods
(7) (6)
(1) (2)
(2) (6)
1 2
(1) (1)
(10) (13)
(c) Factors that may affect future tax charges
The UK corporation tax rate reduced to 24% from April 2012 and will
reduce to 23% from April 2013. A further 2% reduction was proposed in the
December 2012 Autumn Statement, taking the rate to 21% by April 2014.
In addition, a further 1% reduction was proposed in the March 2013 Budget,
taking the rate to 20% by April 2015.
As at the balance sheet date, only the first 1% tax reduction from April 2013
had been “substantively enacted” and hence in accordance with accounting
standards, it is only the impact of this 1% reduction that has been reflected in
the group’s financial statements as at 31 December 2012.
The effect on the group of the further proposed reductions in the UK corporation
tax rate will be reflected in the group's financial statements in future years,
as appropriate, once the proposals have been substantively enacted.
The effect of the reduction in the tax rate to 20% on the group's deferred tax
liability would be to reduce the deferred tax liability (set out in note 17) by
£1,466,000. The rate changes will also impact the amount of future tax
payments to be made by the group.
No provision has been made for deferred tax which would arise in the event
that the group disposed of its investment properties at their current market
values included in these financial statements. Tax would be payable on these
disposals to the extent that rollover relief is not available. The total potential
deferred tax liability on the sale of all the group’s investment properties is
£741 million (2011 – £699 million).
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