Financial Instruments Tax and Accounting Review

For further information contact Richard Clarke (020 7804 2243; richard.d.clarke@uk.pwcglobal.com)

In this article Simon Leach of the PricewaterhouseCoopers Banking & Capital Markets tax team looks at the draft Guidance Notes on the attribution of capital to banking PEs published by the Inland Revenue on 27 November 2002.

The Chancellor delivered his Pre-Budget Report on 27 November 2002. The Report contains very little in the way of new and radical reform. Rather, and not unexpectedly, there is more in the way of a tightening up of existing rules, together with the introduction of a number of anti-avoidance provisions. In this article we have first concentrated on changes of particular interest to the finance sector. A round-up of other changes appears towards the end.

The radical changes in International Accounting Standards (IAS) over existing local Generally Accepted Accounting Practice (GAAP) are likely to have implications for many companies’ tax calculations either immediately or in the future. This article focuses on why IAS have become so important, what IAS are, and why they might be important for tax. In addition, it includes a discussion of the importance of the statutory accounts for tax, pre and post IAS, and then focuses on the impact of various specific IAS.