Virgin Media 2008 Annual Report Download - page 202

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 13—Income Taxes (Continued)
January 10, 2003 is reduced, the benefit would reduce excess reorganization value, then reduce other
intangible assets existing at that date, then be credited to paid in capital. The majority of the valuation
allowance relates to tax attributes that existed at January 10, 2003. Following the adoption of
FAS 141(R) effective January 1, 2009, any future benefit will be recognized as a reduction of income
tax expense.
At December 31, 2008 we have U.K. net operating loss carryforwards of £3.4 billion that have no
expiration date. Pursuant to U.K. law, these losses are only available to offset income of the separate
entity that generated the loss. A portion of the U.K. net operating loss carryforwards relates to dual
resident companies, of which the U.S. net operating loss carryforward amount is £1.6 billion that expire
between 2010 and 2027. U.S. tax rules will limit our ability to utilize the U.S. losses. We also have U.K.
capital loss carryforwards of £12.1 billion that have no expiration date. However, we do not expect to
realize any significant benefit from these capital losses, which can only be used to the extent we
generate U.K. taxable capital gain income in the future from assets held by former NTL companies.
At December 31, 2008, we had fixed assets on which future U.K. tax deductions can be claimed of
£12.9 billion. The maximum amount that can be claimed in any one year is 20% of the remaining
balance, after additions, disposals and prior claims.
The reconciliation of income taxes computed at U.K. statutory rates to income tax expense
(benefit) is as follows (in millions):
Year ended December 31,
2008 2007 2006
Benefit at U.K. statutory rate (2008: 28.5%, 2007 and 2006: 30%) ...... £(279.8) £(140.0) £(103.0)
Add:
Permanent book—tax differences .............................. 132.7 6.3 6.4
Foreign losses with no benefit ................................ 140.6 134.3 94.8
Foreign tax benefit offsetting OCI tax expense .................... (3.4) — —
£ (9.9) £ 0.6 £ (1.8)
Effective January 1, 2007, we adopted FASB Interpretation No. 48, Accounting for Uncertainty in
Income Taxes—an interpretation of FASB Statement 109, or FIN 48. FIN 48 prescribes a comprehensive
model for recognizing, measuring, presenting and disclosing in the financial statements tax positions
taken or expected to be taken on a tax return, including a decision whether to file or not to file in a
particular jurisdiction. The adoption did not result in a cumulative effect adjustment and did not have a
material effect on our consolidated financial statements.
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