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This article provides a comprehensive guide to using the deferred tax and tax accounting templates in Silverfin. It covers the configuration and reconciliation of tax-related templates to ensure accurate financial reporting and compliance. Follow the detailed steps below to utilise the tax computation, timing differences, tax account, tax disclosures, and related templates effectively.

Table of contents

This guide covers the following templates in Silverfin:

  • Tax Computation
  • Timing Differences
  • Tax Account
  • Tax Disclosures
  • DT Disclosure Categories

Tax Computation

The Tax Computation template reconciles the Profit/(Loss) before taxation to the Total Taxable Profits shown in the Taxable Income Schedule, analysing reconciling items by their tax accounting treatment (not their tax treatment). All timing differences in this template are gross timing differences.

Steps for Configuration

  1. Open the Tax Computation template in Silverfin.
  2. Adjust Display Settings:
    • By default, only Profit & Loss (P&L) adjustment columns are displayed.
    • To analyse Other Comprehensive Income (OCI) or Equity adjustments, check the boxes at the top of the template to display additional columns/sections across all tax accounting templates.
  3. Categorise Adjustments.
    • Each adjustment must be categorised as one of the following:
      • Net book value of qualifying assets
      • Capital allowances
      • Pensions
      • Provisions
      • Trading tax losses
      • Non-trade deficits
      • Capital losses
      • Property losses
      • Other losses
      • Other timing differences
      • Net timing differences
    • Each category is classified as either a permanent difference or a timing difference. The total difference value will appear in the relevant column based on its type.
  4. Override Values (Optional).
    • You may override values in the P&L, OCI, and Equity columns for permanent and timing differences.
    • Validation Rule: The template will show as unreconciled if the total of permanent and timing differences does not equal the Total Difference value.
  5. Permanent Differences Classification.
    • Permanent differences are classified as:
      • Non-deductible expenses
      • Non-taxable income
      • Withholding Tax (WHT) suffered
      • Local taxes
      • Overseas taxes
      • Other net permanent differences
      • Group relief not paid for
    • These categories flow to the Tax Disclosures template. Labels can be customised in the DT Disclosure Categories template.
  6. Save Changes.

Timing Differences

The Timing Differences template displays the opening, movement, and closing amounts of gross timing differences, as categorised in the Tax Computation template.

Steps for Configuration

  1. Open the Timing Differences template.
    • If OCI or Equity adjustments are enabled in Tax computation schedule, separate tables for each will appear as you scroll down.
  2. Understand Key Categories.
    • Capital Allowances and Net Book Value of Qualifying Assets are shown in separate rows for clarity.
      • Capital Allowances: The opening and closing amounts typically represent the tax written down value for qualifying assets.
      • Net Book Value of Qualifying Assets: Reflects qualifying depreciation added back in the Trading Income template.
    • Sign Convention.
      • Capital Allowances:
        • Relieved in the period: Negative in the Current Year - P&L column.
        • Opening and closing amounts: Positive.
      • Net Book Value of Qualifying Assets:
        • Qualifying depreciation in P&L: Positive in the Current Year - P&L column.
        • Opening and closing amounts: Negative.
  3. Enter Rates.
    • Amend the opening, closing, and current year deferred tax rates at the top of the template. These apply to all rows.
  4. Enter Opening Balances.
    • In the first period, manually enter opening balances.
    • In subsequent periods, opening balances are automatically linked to the prior period’s closing balance.
  5. Record Current Year Movements.
    • Enter tax-effected values from the Tax Computation template in the Current Year - (Charge)/Credit column.
    • Use the Other and Acquisitions, Disposals, Transfers columns for additional adjustments.
  6. Save Changes.

Tax Account

The Tax Account template tracks movements in the Current and Deferred Tax accounts.

Current Tax Account

  1. Navigate to the Tax Account Template.
  2. Record Current Year P&L Tax Charge.
    • The charge is derived from the Tax Computation template unless overridden in the Timing Differences template.
  3. Record Movements.
    • Track movements for corporate and local taxes for the current and prior three financial years separately.
    • Balances from earlier periods are consolidated into the Earlier Years row.
  4. Enter Opening Balances.
    • In the first period, manually enter opening balances.
    • In subsequent periods, opening balances are linked to the prior period’s closing balance.
  5. Save Changes.

Deferred Tax Account

  1. Analyse by Category.
    • Movements are analysed based on categories in the Timing Differences template.
  2. Adjust Closing Balances.
    • Use the Other BS column to make adjustments to closing balances.
  3. Save Changes.

Tax Disclosures

The Tax Disclosures template summarises data from other templates for financial statement presentation.

Steps for Configuration

  1. Navigate to the Tax Disclosures Template.
  2. Review Summarised Data.
    • Ensure all data from the Tax Computation, Timing Differences, and Tax Account templates is correctly populated.
  3. Customize Labels.
    • Amend category labels in the DT Disclosure Categories template if needed.
  4. Save Changes.

DT Disclosure Categories

The DT Disclosure Categories template allows customisation of labels for permanent difference categories that flow to the Tax Disclosures template.

Steps for Configuration

  1. Navigate to the DT Disclosure Categories Template.
  2. Amend Labels.
    • Update labels for permanent difference categories (e.g., Non-deductible expenses, Non-taxable income).
  3. Save Changes.

Troubleshooting Common Issues

Unreconciled Indicators

  • If unreconciled indicators appear, ensure amounts in the Tax Computation and Timing Differences templates match.
  • Verify that all required fields in the Tax Account and Tax Disclosures templates are completed.

Validation Errors

  • If the Tax Computation template shows errors (e.g., permanent and timing differences not equaling the Total Difference), adjust the values to comply with validation rules.

Best Practices

  • Double-Check Amounts: Verify that amounts in the Tax Computation, Timing Differences, and Tax Account templates are consistent to avoid reconciliation issues.
  • Save Frequently: Save changes after completing each template to avoid data loss and ensure validations are applied.

Additional Support

For issues or questions about the deferred tax and tax accounting functionality in Silverfin, contact our support team via:

  • Email: support@silverfin.com
  • Help Center: Visit the Silverfin Help Center for additional guides and FAQs.
  • Chat Use the in-app chat feature to connect with a support representative.