Aviva 2009 Annual Report Download - page 229

227
Performance review
Aviva plc Notes to the consolidated financial statements continued
Corporate responsibility
Annual Report and Accounts 2009
Governance
Shareholder information
Financial statements IFRS
Financial statements MCEV
Other information
45 – Tax assets and liabilities
This note analyses the tax assets and liabilities that appear in the statement of financial position, and explains the movements
in these balances in the year.
(a) Current tax
Current tax assets recoverable and liabilities payable in more than one year are £254 million and £49 million ( 2008: £230 million
and £362 million)
.
The taxation of foreign profits and worldwide debt cap rules were enacted in the Finance Act 2009. Under the foreign profits
rules, a dividend exemption was introduced which largely exempts dividends received on or after 1 July 2009 from UK corporation
tax. The Group has applied this legislation in arriving at its UK tax results for 2009. The worldwide debt cap rules apply from
1 January 2010 and are not expected to apply to the Group due to an exemption for qualifying financial services groups.
(b) Deferred tax
(i) The balances at 31 December comprise:
Restated
20091 2008
£m £m
Deferred tax assets 218 2,642
Deferred tax liabilities (1,038) (3,063)
Net deferred tax liability (820) (421)
1. As a result of Aviva's US sub-group filing a single consolidated tax return for the first time in 2009, deferred tax assets and liabilities in this jurisdiction are presented net for the year ended
31 December 2009. This has reduced both assets and liabilities by £1 billion compared with the previous year end.
(ii) The net deferred tax liability arises on the following items:
Restated
2009 2008
£m £m
Long-term business technical provisions and other insurance items 1,290 467
Deferred acquisition costs (662) (769)
Unrealised (gains)/losses on investments (915) 724
Pensions and other post-retirement obligations 100 66
Unused losses and tax credits 824 702
Subsidiaries, associates and joint ventures (7) 6
Intangibles and additional value of in-force long-term business (766) (1,090)
Provisions and other temporary differences (684) (527)
Net deferred tax liability (820) (421)
(iii) The movement in the net deferred tax liability was as follows:
Restated
2009 2008
£m £m
Net liability at 1 January 2008 as reported (421) (1,942)
Prior year adjustment (see note 2b(ii)) — (33)
Net liability at 1 January restated (421) (1,975)
Acquisition and disposal of subsidiaries (22) (13)
Amounts (charged)/credited to profit (note 13a) (254) 1,726
Amounts (charged)/credited to other comprehensive income (note 13b) (196) 219
Exchange differences 37 (111)
Other movements 36 (267)
Net liability at 31 December (820) (421)
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the
temporary differences can be utilised. In countries where there is a history of tax losses, deferred tax assets are only recognised
in excess of deferred tax liabilities if there is convincing evidence that future profits will be available. Where this is the case the
directors have relied on business plans supporting future profits.
The Group has unrecognised tax losses and other temporary differences of £2,975 million
(2008: £2,961 million) to carry
forward against future taxable income of the necessary category in the companies concerned. Of these, trading losses of
£127 million will expire within the next 15 years. The remaining losses have no expiry date.
In addition, the Group has unrecognised capital losses of £462 million
(2008: £556 million) . Of these, £345 million will expire
within the next 15 years. The remaining capital losses have no expiry date.
Deferred tax liabilities have not been established for temporary differences in respect of unremitted overseas retained earnings
of £144 million
(2008: £6,121 million) associated with investments in subsidiaries and interests in joint ventures and associates
because the Group can control the timing of the reversal of these differences and it is probable that they will not reverse in the
foreseeable future. The temporary differences at 31 December 2009 are significantly reduced from those at 31 December 2008
following the UK tax law change which largely exempts dividends received on or after 1 July 2009 from UK tax. The temporary
differences at 31 December 2009 represent only the unremitted earnings of those overseas subsidiaries in respect of which a tax
liability may still arise on remittance of those earnings to the UK, principally as a result of overseas withholding taxes on dividends.
Financial statements IFRS