REFS is
a mine of invaluable information for the private investor.
Selecting shares without its help is like trying to
clap with one hand tied behind your back.
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Adjusting
for tax
The corporation
tax within the annual tax charge is based on the company’s estimate
of its taxable profit or loss, which is subject to assessment
by the Inland Revenue. As with personal income tax, the assessment
of taxable profit depends on the taxable element of income,
and upon which items of expenditure are allowable for offset
against this. It is not necessary to be concerned here with
the detail of this calculation - merely the concept.
If adjustments
to reported profit are needed in arriving at IIMR or normalised
earnings figures, it follows that in some instances it is necessary
to make corresponding adjustments to the reported tax charge.
Once the
earnings adjustments, i.e. the items to be taken out of the
reported FRS3 earnings, are identified, the next step is to
establish whether any of the tax charge relates to those items.
In most cases the company indicates the amount of tax attributable
to the exceptional items shown under FRS3, although this may
well be an aggregate figure.
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