Vodafone 2014 Annual Report Download - page 121

6. Taxation
This note explains how our Group tax charge arises. The deferred tax section of the note also provides information
on our expected future tax charges and sets out the tax assets held across the Group together with our view on
whether or not we expect to be able to make use of these in the future.
Accounting policies
Income tax expense represents the sum of the current tax payable and deferred tax.
Current tax payable or recoverable is based on taxable prot for the year. Taxable prot differs from prot as reported in the income statement
because some items of income or expense are taxable or deductible in different years or may never be taxable or deductible. The Group’s liability for
current tax is calculated using UK and foreign tax rates and laws that have been enacted or substantively enacted by the reporting period date.
Deferred tax is the tax expected to be payable or recoverable in the future arising from temporary differences between the carrying amounts
of assets and liabilities in the nancial statements and the corresponding tax bases used in the computation of taxable prot. It is accounted for using
the statement of nancial position liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred
tax assets are recognised to the extent that it is probable that temporary differences or taxable prots will be available against which deductible
temporary differences can be utilised.
Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination)
of assets and liabilities in a transaction that affects neither the taxable prot nor the accounting prot. Deferred tax liabilities are not recognised to the
extent they arise from the initial recognition of non-tax deductible goodwill.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint
arrangements, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference
will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting period date and adjusted to reect changes in the Group’s assessment that
sufcient taxable prots will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised, based on tax rates
that have been enacted or substantively enacted by the reporting period date.
Tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they
either relate to income taxes levied by the same taxation authority on either the same taxable entity or on different taxable entities which intend
to settle the current tax assets and liabilities on a net basis.
Tax is charged or credited to the income statement, except when it relates to items charged or credited to other comprehensive income or directly
to equity, in which case the tax is recognised in other comprehensive income or in equity.
Income tax expense
2014
Restated
2013
Restated
2012
£m £m £m
United Kingdom corporation tax expense/(income):
Current year –––
Adjustments in respect of prior years 17 24 (4)
17 24 (4)
Overseas current tax expense/(income):
Current year 3 ,114 1,062 1,118
Adjustments in respect of prior years (25) (249) (42)
3,089 813 1,076
Total current tax expense 3,106 837 1,072
Deferred tax on origination and reversal of temporary differences:
United Kingdom deferred tax 57 (52) (8)
Overseas deferred tax (19,745) (309) (359)
Total deferred tax income (19,688) (361) (367)
Total income tax (income)/expense (16,582) 476 705
UK operating prots are more than offset by statutory allowances for capital investment in the UK network and systems plus ongoing interest costs
including those arising from the £6.8 billion of spectrum payments to the UK government in 2000 and 2013.
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