FRS 16 - Current Tax

The Accounting Standards Board has issued a new Financial Reporting Standard on current tax, FRS 16. This supersedes SSAP 8, which became completely out of date when advance corporation tax was abolished in April 1999.

The requirements of FRS 16 are little changed from those of the exposure draft, FRED 18, which preceded it.

Thus, dividends received from UK companies are no longer reported gross, by adding the attributable tax credit to both the dividend income and the tax charge. Instead, they are reported at the net amount received.

In a useful clarification, the FRS now specifically requires that dividends received from other countries be reported gross only to the extent that they have suffered a withholding tax. Other tax credits attaching to the dividend are not taken into account.