Virgin Media 2011 Annual Report Download - page 212

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
VIRGIN MEDIA INVESTMENTS LIMITED AND SUBSIDIARIES
COMBINED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 11—Income Taxes (continued)
The reconciliation of income taxes computed at U.S. federal statutory rates to income tax (expense) benefit
attributable to continuing operations is as follows (in millions):
Year ended December 31,
2011 2010 2009
Benefit at U.K. statutory rate (2011: 26%, 2010: 28% and 2009: 28% ) ............ £(54.2) £ 72.0 £ 95.0
Add:
Permanent book-tax differences ....................................... (9.6) (0.4) (9.5)
Reduction in valuation allowance for US NOLs ........................... 3.2 79.8 0.0
Increase (decrease) in valuation allowance due to current year activity ......... 68.9 (65.0) (84.4)
U.K. tax benefit offsetting OCI tax expense .............................. (23.9) 41.5 0.0
Benefit (provision) for income taxes ........................................ £(15.6) £127.9 £ 1.1
A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows (in
millions):
2011 2010 2009
Balance, January 1 ....................................... £0.0 £0.0 £ 1.5
Additions based on tax positions related to the current year . . . 0.0 0.0 0.0
Additions for tax provisions of prior years ................. 0.3 0.0 0.0
Reductions for tax provisions of prior years ................ 0.0 0.0 (1.5)
Reductions for lapse of applicable statute of limitation ....... 0.0 0.0 0.0
Settlements ......................................... 0.0 0.0 0.0
Balance, December 31 .................................... £0.3 £0.0 £ 0.0
The total amount of unrecognized tax benefits as of December 31, 2011, 2010 and 2009 was £0.3 million,
£0.0 million and £0.0 million respectively. We recognize interest and penalties related to unrecognized tax
benefits in income tax expense. The statute of limitations is open for the years 2010 to 2011 in the U.K., our
major tax jurisdiction.
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 the year,
projections of the proportion of income (or loss) earned and taxed in the U.K. and the extent to which this income
(or loss) may also be taxed in the United States, permanent and temporary differences, the likelihood of deferred
tax assets being recovered and the outcome of contingent tax risks. In the normal course of business, our tax
returns are subject to examination by various taxing authorities. Such examinations may result in future tax and
interest assessments by these taxing authorities for uncertain tax positions taken in respect to matters such as
business acquisitions and disposals and certain financing transactions including intercompany transactions,
amongst others. We accrue a liability when we believe an assessment may be probable and the amount is
estimable. In accordance with generally accepted accounting principles, the impact of revisions to these estimates
is recorded as income tax expense or benefit in the period in which they become known. Accordingly, the
estimates used to compute the provision for income taxes may change as new events occur, as more experience is
acquired, as additional information is obtained and as our tax environment changes.
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