In May 2010 the Taxation (Budget Measures) Act 2010 did away with tax deductions for depreciation on buildings with an expected life of 50 years or more. That in itself had many taxpayers and their advisors shaking their heads in dismay. However, imagine the impact it has on companies with large property portfolios. This latest amendment to the tax law has resulted in many companies having a deferred tax liability.
The effect of these deferred tax liabilities is that companies’ accounts may not reflect a “true and fair view” and may be misleading for investors because even though it affects the net profit, it does not have any relevance to the performance of the company per se.
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