Major changes to the tax regime under IFRS could give unwary companies a nasty surprise. Gavin Hinks lists the top four issues that finance departments need to focus on
1 One to be wary of, if you like to keep an eye on your tax bill, is the thorny issue of goodwill deductions. Goodwill is one of those conceptual issues that easily foxes people, and with the introduction of IFRS there’s a real risk of losing some tax benefits unless you stay on your toes.
Under the old regime of UK GAAP, companies had to write down the goodwill racked up during an acquisition. Goodwill is, of course, that tricky sum of money you paid for a company over and above the value of its assets. If you paid £100m for assets worth £70m, then the goodwill equates to £30m. You might amortise that at £3m a year and would therefore have a deduction of £3m to set against your tax bill.
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