Vodafone 2009 Annual Report Download - page 89

Financials
Vodafone Group Plc Annual Report 2009 87
Deferred tax
Analysis of movements in the net deferred tax balance during the year:
2009
£m
1 April 2008 (4,673)
Exchange movements (1,008)
Charged to the income statement (382)
Credited directly to equity 64
Reclassification from current tax 16
Merger and acquisition activity (29)
31 March 2009 (6,012)
Deferred tax assets and liabilities in respect of continuing operations, before offset of balances within countries, are as follows:
Amount Net
credited/ recognised
(charged) Gross Gross Less deferred tax
in income deferred deferred tax amounts asset/
statement tax asset liability unrecognised (liability)
£m £m £m £m £m
Accelerated tax depreciation (330) 765 (2,488) (52) (1,775)
Tax losses (366) 23,538 − (23,386) 152
Deferred tax on overseas earnings 26 − (4,052) − (4,052)
Other short term timing differences 288 3,927 (2,416) (1,848) (337)
31 March 2009 (382) 28,230 (8,956) (25,286) (6,012)
Analysed in the balance sheet, after offset of balances within countries, as:
£m
Deferred tax asset 630
Deferred tax liability (6,642)
31 March 2009 (6,012)
Amount Net
credited/ recognised
(charged) Gross Gross Less deferred tax
in income deferred deferred tax amounts asset/
statement tax asset liability unrecognised (liability)
£m £m £m £m £m
Accelerated tax depreciation 326 576 (1,635) (25) (1,084)
Tax losses (6) 25,792 − (25,433) 359
Deferred tax on overseas earnings (255) − (3,535) − (3,535)
Other short term timing differences (117) 3,807 (2,223) (1,997) (413)
31 March 2008 (52) 30,175 (7,393) (27,455) (4,673)
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)
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 tax issues, future planning opportunities, corporate
acquisitions and disposals, the use of brought forward tax losses and changes in tax legislation and tax rates.
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 subsidiar y Vodafone 2 is responding to an enquiry by 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 33 “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.