Skip Links

 

Menu Links

Notes to the accounts

8 Taxation
  2004   2003
  UK
£m		 Overseas
£m		 Total
£m		   UK
£m		 Overseas
£m		 Total
£m
Corporation tax for the year on profits before
goodwill amortisation and exceptional tax items		 - 10.7 10.7   - 9.9 9.9
Tax on goodwill amortisation - (0.1) (0.1)   - (0.2) (0.2)
Other exceptional tax charges 9.8 - 9.8   - - -
  9.8 10.6 20.4   - 9.7 9.7
Double tax relief - - -   (0.5) - (0.5)
Over-provision for prior years (0.3) (0.6) (0.9)   - - -
Total current tax charge/(credit) 9.5 10.0 19.5   (0.5) 9.7 9.2
Deferred tax - origination and reversal of timing differences:
Deferred tax before exceptional item - 2.5 2.5   (0.4) 1.3 0.9
Net exceptional deferred tax credits - (9.8) (9.8)   - - -
Total deferred tax (credit)/charge - (7.3) (7.3)   (0.4) 1.3 0.9
Total charge/(credit) 9.5 2.7 12.2   (0.9) 11.0 10.1
The effective tax rate, excluding loss on sale or termination of businesses and goodwill amortisation, was 24.1% (2003: 21.1%).

Exceptional tax charges and credits have been recognised in respect of tax due on intra-group dividends (£9.8m), the recognition of a deferred tax asset in respect of Danish tax losses brought forward (£12.2m) and the write down of deferred tax assets in the US (£2.4m).

A tax liability has been recognised on dividends received in the UK from EU-based subsidiaries on the basis of current UK tax legislation. This is currently the subject of a group litigation order that is expected to be heard during 2005 and which may be referred to the European Court of Justice. In view of the uncertainties regarding the final outcome of the court proceedings and taking into account current UK tax law, a liability has been recognised. In the event that current UK law is overturned, no tax will be due.
A deferred tax asset has been recognised in respect of brought forward Danish losses following agreement as to their quantum and basis with the tax authorities and in light of the Danish operations' current and expected performance.

The standard rate of corporation tax for the year, based on the weighted average of tax rates applied to the group's profits, is 31.6% (2003: 30.4%). The current tax charge for the year is higher (2003: lower) than the standard rate of corporation tax for the reasons set out in the following reconciliation:
  2004
£m		 2003
£m
Profit on ordinary activities before taxation 36.9 36.1
Corporation tax at standard rate of 31.6% (2003: 30.4%) 11.7 11.0
Non-taxable income and gains (1.4) (9.5)
Non-deductible expenditure 5.1 10.5
Timing differences (2.6) (0.7)
Other current year items (2.2) (2.1)
Exceptional tax charge - dividends received from EU-based subsidiaries 9.8 -
Adjustments to prior year tax charges (0.9) -
Current tax charge 19.5 9.2

The tax charge on profits before goodwill amortisation and exceptional items is expected to increase further towards the weighted average statutory tax rate over the next three years.

back to top