Virgin Media 2009 Annual Report Download - page 202

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 13—Income Taxes (Continued)
Deferred income taxes reflect the net tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax
purposes. Significant components of deferred tax liabilities and assets are as follows (in millions):
December 31,
2009 2008
Deferred tax liabilities:
Intangibles .................................... £ 74.0 £ 143.2
Equity investments .............................. 83.0 79.2
Derivative instruments ........................... — 15.7
Total deferred tax liabilities .......................... 157.0 238.1
Deferred tax assets:
Net operating losses ............................. 927.4 970.0
Capital losses .................................. 3,440.7 3,388.6
Depreciation and amortization ...................... 2,124.3 2,046.4
Accrued expenses ............................... 79.8 88.1
Derivative instruments ........................... 11.0 —
Capitalized costs and other ........................ 103.5 110.9
Total deferred tax assets ............................ 6,686.7 6,604.0
Valuation allowance for deferred tax assets .............. (6,612.7) (6,445.1)
Net deferred tax assets ............................. 74.0 158.9
Net deferred tax liabilities .......................... £ 83.0 £ 79.2
The following table summarizes the movements in our deferred tax valuation allowance during the
years ended December 31, 2009, 2008 and 2007 (in millions):
Year ended December 31,
2009 2008 2007
Balance, January 1 ......................... £6,445.1 £6,375.6 £6,541.4
Acquisitions ............................———
Effect of changes in tax rates ................ — — (446.6)
Increase in UK deferred tax attributes ......... 167.6 69.5 280.8
Balance, December 31 ....................... £6,612.7 £6,445.1 £6,375.6
A valuation allowance is recorded to reduce the deferred tax asset to an amount that is more
likely than not to be realized. To the extent that the portion of the valuation allowance is reduced, the
benefit will be recognized as a reduction of income tax expense.
At December 31, 2009 we have U.K. net operating loss carryforwards of £3.3 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 £1.5 billion that
expires between 2010 and 2029. U.S. tax rules will limit our ability to utilize the U.S. losses. We also
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