BT 2003 Annual Report Download - page 97

12. Tax on profit (loss) on ordinary activities
2003
£m
2002
£m
2001
£m
United Kingdom:
Corporation tax at 30% 447 275 690
Taxation on the group’s share of results of associates –26
Taxation on the group’s share of results of joint ventures ––42
Prior year adjustments 12 – (185)
Non-UK taxation:
Current 47 23 24
Taxation on the group’s share of results of associates 81 50 33
Taxation on the group’s share of results of joint ventures –34 146
Prior year adjustments (26) (7) (20)
Total current taxation 561 377 736
Deferred taxation charge (credit) at 30%
Origination and reversal of timing differences (29) 34 87
Prior year adjustments (73) 32 (111)
Total deferred taxation (102) 66 (24)
Total tax on profit (loss) on ordinary activities 459 443 712
The tax credit relating to exceptional items is £139 million (2002 – £143 million credit, 2001 – £22 million
charge) of which £nil (2002 – £nil, 2001 – £12 million charge) relates to profit on sale of fixed asset investments
and group undertakings, and profit on sale of property fixed assets.
A tax charge on recognised gains and losses not included in the profit and loss account of £16 million
(2002 – £11 million, 2001 – £29 million) related to exchange movements offset in reserves.
In the year ended 31 March 2001, the loss on ordinary activities before taxation was £1,031 million, after
charging £3,200 million of goodwill impairment, which is not an allowable expense for taxation. In the following
table, the effective corporation tax rate is reconciled to the profit of £2,169 million before this impairment charge.
Current tax and total tax on profit on ordinary activities, differs from the amount computed by applying
the corporation tax rate to profit on ordinary activities before taxation. The differences were attributable to
the following factors:
2003
%
2002
%
2001
%
UK corporation tax rate 30.0 30.0 30.0
Non-deductible depreciation, amortisation and impairment 0.4 92.6 9.0
Non-deductible non-UK losses 3.3 17.8 11.3
Higher taxes on non-UK profits 0.4 0.8 4.0
Excess depreciation over capital allowances 3.4 9.7 0.7
Pension provisions and prepayments (3.2) (11.5) (4.0)
Other timing differences 0.7 (0.5) (0.7)
Lower effective tax on gain on disposal of fixed asset
investments and group undertakings (16.5) (66.3) (8.3)
Higher (lower) effective tax on gain on disposal of non qualifying assets 2.0 (44.6) –
Prior year adjustments (2.0) (0.5) (9.5)
Other (0.8) (1.7) 1.4
Current tax – effective corporation tax rate 17.7 25.8 33.9
Deferred taxes on excess depreciation over capital allowances (3.4) (9.7) (0.7)
Pension provisions and prepayments 3.2 11.5 4.0
Other timing differences (0.7) 0.5 0.7
Prior year adjustments (2.3) 2.2 (5.1)
Total tax – effective corporation tax rate 14.5 30.3 32.8
Factors that may affect future tax charges
The group operates in countries where the tax rate is different to the UK corporate tax rate, primarily the USA,
the Netherlands, the Republic of Ireland, Germany and Spain.
As at 31 March 2003, the group had overseas corporate tax losses estimated to be £1.2 billion which are not
recognised as deferred tax assets. In addition, the group has unutilised capital losses estimated to be in excess
of £10 billion which were not recognised as deferred tax assets.
Notes to the financial statements
96 BT Annual Report and Form 20-F 2003