Annual Report and Accounts 2006
Notes to the Financial Statements
24. Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the Group, and the movements thereon, during the current and prior reporting periods.
| Accelerated tax depreciation £m |
Acquisition intangibles £m |
Retirement benefit obligations £m |
Losses £m |
Other £m |
Total £m |
|
|---|---|---|---|---|---|---|
| At 29 December 2003 | 60 | 857 | (40) | (8) | 64 | 933 |
| Charge to equity for the year | – | – | (1) | – | – | (1) |
| Charge to income statement – continuing operations | 1 | 60 | 5 | 1 | (6) | 61 |
| – discontinued operations | – | (14) | – | – | 43 | 29 |
| Acquisition of subsidiary | (2) | 2 | – | – | (4) | (4) |
| Transfer to current tax | – | – | – | 2 | (102) | (100) |
| Exchange differences | 3 | (42) | 2 | – | (3) | (40) |
| At 2 January 2005 | 62 | 863 | (34) | (5) | (8) | 878 |
| Charge to equity for the year | – | – | 20 | – | (3) | 17 |
| Charge/(credit) to income statement – continuing operations | 15 | 42 | (50) | (4) | (50) | (47) |
| Charge/(credit) to income statement – discontinued operations | – | (11) | – | – | – | (11) |
| Acquisition of subsidiary | – | 7 | – | – | – | 7 |
| Transfer to discontinued operations | (2) | (67) | – | – | (24) | (93) |
| Exchange differences | 7 | 79 | (1) | (3) | (2) | 80 |
| At 1 January 2006 | 82 | 913 | (65) | (12) | (87) | 831 |
| Charge to equity for the year | – | – | 24 | – | (6) | 18 |
| Charge/(credit) to income statement – continuing operations | (15) | 69 | 15 | (32) | (32) | 5 |
| Acquisition of subsidiary | 37 | 116 | – | – | (24) | 129 |
| Transfer | (10) | (4) | (16) | – | 30 | – |
| Transfer to discontinued operations | 1 | – | – | – | – | 1 |
| Exchange differences | (10) | (97) | 3 | – | – | (104) |
| At 31 December 2006 | 85 | 997 | (39) | (44) | (119) | 880 |
'Other' consists primarily of short-term timing differences (including the deferred tax on restructuring provisions) and share awards.
The following is the analysis of the deferred tax balances for balance sheet purposes:
| 2006 £m |
2005 £m |
2004 £m |
|
|---|---|---|---|
| Deferred tax assets | (170) | (123) | (17) |
| Deferred tax liabilities | 1,050 | 954 | 895 |
| 880 | 831 | 878 |
At the balance sheet date the Group has unused tax losses for which no deferred tax asset has been recognised of £187 million (2005: £165 million; 2004: £115 million). We do not believe that it is more likely than not that these amounts will be recoverable. Tax losses of £8 million expire in 2007, £100 million expire between 2007 and 2018 and £6 million expire after 2018. Other tax losses may be carried forward indefinitely.
At the balance sheet date, the aggregate amount of undistributed earnings of subsidiaries for which deferred tax liabilities have not been recognised is £5.2 billion (2005: £4.7 billion; 2004: £3.9 billion). No liability has been recognised in respect of these differences because the Group is in a position to control the timing of the reversal of the temporary differences and it is probable that such differences will not reverse.
Temporary differences arising in connection with interests in associates and jointly controlled entities are insignificant.