Vodafone 2008 Annual Report Download - page 103

Deferred tax
Analysis of movements in the net deferred tax balance during the year:
2008
£m
1 April 2007 (4,216)
Charged to the income statement (52)
Credited directly to equity 65
Acquisitions and disposals (480)
Exchange movements 10
31 March 2008 (4,673)
Deferred tax assets and liabilities in respect of continuing operations, before offset of balances within countries, are as follows:
Net Amount
recognised credited/
Gross Gross Less deferred tax (charged)
deferred deferred tax amounts asset/ in income
tax asset liability unrecognised (liability) statement
£m £m £m £m £m
Accelerated tax depreciation 576 (1,635) (25) (1,084) 326
Tax losses 25,792 − (25,433) 359 (6)
Deferred tax on overseas earnings − (3,535) − (3,535) (255)
Other short term timing differences 3,807 (2,223) (1,997) (413) (117)
31 March 2008 30,175 (7,393) (27,455) (4,673) (52)
Analysed in the balance sheet, after offset of balances within countries, as:
£m
Deferred tax asset 436
Deferred tax liability (5,109)
31 March 2008 (4,673)
Net Amount
recognised credited/
Gross Gross Less deferred tax (charged)
deferred deferred tax amounts asset/ in income
tax asset liability unrecognised (liability) statement
£m £m £m £m £m
Accelerated tax depreciation 386 (1,720) (25) (1,359) 112
Tax losses 13,619 − (13,334) 285 (264)
Deferred tax on overseas earnings − (3,296) − (3,296) 373
Other short term timing differences 4,147 (1,615) (2,378) 154 469
31 March 2007 18,152 (6,631) (15,737) (4,216) 690
Analysed in the balance sheet, after offset of balances within countries, as:
£m
Deferred tax asset 410
Deferred tax liability (4,626)
31 March 2007 (4,216)
Factors affecting the tax charge in future years
Factors that may affect the Group’s future tax charge include the impact of corporate restructuring, the resolution of open issues, future planning opportunities,
corporate acquisitions and disposals, the use of brought forward tax losses and changes in tax legislation and tax rates. For example, in June 2007, the UK Government
issued a discussion document about the taxation of companies’ foreign profits and invited comments from business in order to develop more detailed proposals for
further consultation and potential legislation in the 2009 calendar year.
Vodafone is routinely subject to audit by tax authorities in the territories in which it operates and the following items have reached litigation. The Group holds provisions
in respect of the potential tax liability that may arise. However, the amount ultimately paid may differ materially from the amount accrued and could therefore affect
the overall profitability and cash flows of the Group in future periods.
The Group’s subsidiary Vodafone 2 is responding to an enquiry by HM Revenue & Customs (“HMRC”) with regard to the UK tax treatment of one of its Luxembourg
holding companies under the controlled foreign companies (“CFC”) rules. Further details in relation to this enquiry are included in note 32 “Contingent liabilities”.
A Spanish subsidiary, Vodafone Holdings Europe SL (“VHESL”), is in disagreement with the Spanish tax authorities regarding the tax treatment of interest expenses
claimed by VHESL in the accounting periods ended 31 March 2003 and 31 March 2004. The matter is now being pursued through the Spanish court system.
Vodafone Group Plc Annual Report 2008 101