Virgin Media 2009 Annual Report Download - page 203

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 13—Income Taxes (Continued)
have U.K. capital loss carryforwards of £12.3 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 subsidiaries held by the
group prior to the merger with Telewest.
At December 31, 2009, we had fixed assets on which future U.K. tax deductions can be claimed of
£12.1 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 benefit
(expense) is as follows (in millions):
Year ended December 31,
2009 2008 2007
Benefit at U.K. statutory rate (2009: 28%, 2008 28.5% and 2007: 30%) . . . £ 90.7 £ 261.1 £ 136.8
Add:
Permanent book-tax differences ................................ (9.5) (132.7) (6.3)
Foreign losses with no benefit ................................. (80.1) (121.9) (131.1)
Foreign tax benefit offsetting OCI tax expense ..................... — 3.4 —
Benefit (provision) for income taxes ............................. £ 1.1 £ 9.9 £ (0.6)
A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows (in
millions):
2009 2008
Balance at January 1, .................................... £1.5 £1.1
Additions based on tax positions related to the current year ....... — —
Additions for tax provisions of prior years .................... — 0.4
Reductions for tax provisions of prior years ................... (1.5) —
Reductions for lapse of applicable statute of limitation ........... — —
Settlements ............................................ — —
Balance at December 31, .................................. £ — £1.5
The total amount of unrecognized tax benefits as of December 31, 2009 and 2008 were nil and
£1.5 million, respectively. We do not expect that the amount of unrecognized tax benefits will
significantly increase or decrease in the next twelve months.
We recognize interest and penalties related to unrecognized tax benefits in income tax expense. We
have accrued interest in respect of unrecognized tax benefits of nil and £0.2 million at December 31,
2009 and 2008, respectively. There was a benefit in respect of interest accrual of £0.2 million in income
tax expense for the year ended December 31, 2009.
The statute of limitations is open for the years 2006 to 2009 in the U.S. and 2007 to 2009 in the
U.K., our major tax jurisdictions.
At each period end, it is necessary for us to make certain estimates and assumptions to compute
the provision for income taxes including, but not limited to the expected operating income (or loss) for
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