Annual report and accounts 2008

Notes contentsNotes to consolidated financial statements

13. Deferred income tax

All figures in £ millions	2008	2007
Deferred income tax assets
Deferred income tax assets to be recovered after more than 12 months	341	262
Deferred income tax assets to be recovered within 12 months	31	66
	372	328
Deferred income tax liabilities
Deferred income tax liabilities to be settled after more than 12 months	(447)	(287)
Deferred income tax liabilities to be settled within 12 months	—	—
	(447)	(287)
Net deferred income tax	(75)	41

Deferred income tax assets to be recovered within 12 months relate to the utilisation of losses in the US.

Deferred income tax assets and liabilities may be offset when there is a legally enforceable right to offset current tax assets against current income tax liabilities and when the deferred income taxes relate to the same fiscal authority. The Group has unrecognised deferred income tax assets at 31 December 2008 in respect of UK losses of £28m (2007: £34m). None of these unrecognised deferred income tax assets have expiry dates associated with them.

The recognition of the deferred income tax assets is supported by management’s forecasts of the future profitability of the relevant business units.

The movement on the net deferred income tax account is as follows:

All figures in £ millions	Notes	2008	2007
At beginning of year		41	172
Exchange differences		(12)	(4)
Income statement charge	7	(93)	(87)
Acquisition through business combination	30	(4)	(45)
Disposal through business disposal	32	—	2
Tax (charge)/benefit to equity		(7)	3
At end of year		(75)	41

The movement in deferred income tax assets and liabilities during the year is as follows:

All figures in £ millions	Capital losses	Trading losses	Goodwill and intangibles	Returns provisions	Other	Total
Deferred income tax assets
At 1 January 2007	76	129	25	66	121	417
Exchange differences	—	(5)	—	(1)	(2)	(8)
Acquisition through business combination	—	10	—	—	1	11
Income statement (charge)/benefit	(76)	(47)	(5)	14	19	(95)
Tax benefit to equity	—	—	—	—	3	3
At 31 December 2007	—	87	20	79	142	328
Exchange differences	—	19	6	28	40	93
Acquisition through business combination	—	2	—	—	—	2
Income statement charge	—	(35)	(6)	(1)	(3)	(45)
Tax charge to equity	—	—	—	—	(6)	(6)
At 31 December 2008	—	73	20	106	173	372

Other deferred income tax assets include temporary differences on share-based payments, inventory, retirement benefit obligations and other provisions.

All figures in £ millions	Goodwill and intangibles	Other	Total
Deferred income tax liabilities
At 1 January 2007	(149)	(96)	(245)
Exchange differences	3	1	4
Acquisition through business combination	(56)	—	(56)
Disposal through business disposal	—	2	2
Income statement (charge)/benefit	(12)	20	8
Tax benefit to equity	—	—	—
At 31 December 2007	(214)	(73)	(287)
Exchange differences	(73)	(32)	(105)
Acquisition through business combination	(5)	(1)	(6)
Income statement charge	(26)	(22)	(48)
Tax charge to equity	—	(1)	(1)
At 31 December 2008	(318)	(129)	(447)

Other deferred income tax liabilities include temporary differences in respect of depreciation and royalty advances.