User Roles AdminStaff contributor ✗External contributor ✗Pulse user 

The Prior year adjustment template records adjustments that relate to earlier periods — for example the correction of a prior-period error, or a difference between the tax provided in the accounts last year and the tax finally agreed. These adjustments affect the current-period tax reconciliation rather than the current-period liability.

Table of contents 

When should I use this template?

Use it where there is a prior-year adjustment to the tax charge — typically an over- or under-provision of tax in a previous period that is corrected in the current accounts.

Working through the template

Enter each prior-year adjustment with a description of what it relates to. For each adjustment you can also select a timing difference category from a dropdown, so that where the adjustment relates to a timing difference it is analysed under the correct deferred tax category (the category list is the same one configured in the DT disclosure categories - setup template). Adjustments that are permanent in nature are left without a timing difference category.

What flows through to the rest of Corporation Tax?

The prior-year adjustment feeds the Tax reconciliation and the Tax account, where it is shown as a separate reconciling item; where a timing difference category is selected, it is reflected in the deferred tax analysis.

Frequently asked questions

What is a prior year adjustment in this context?

Typically an over- or under-provision of tax from an earlier period that is corrected now, or a correction of a prior-period error affecting tax.

Why would I set a timing difference category?

So a prior-year adjustment that relates to a timing difference is analysed correctly for deferred tax. Leave it blank for a permanent adjustment.

Does it change the current-period corporation tax liability?

No — it is a reconciling item in the tax charge and reconciliation, not part of the current-period liability calculation.

Where the data comes from

  • The adjustment is entered here; the timing difference category options come from DT disclosure categories - setup.
  • The figure feeds the Tax computation, the Tax reconciliation and the Tax account as a separate reconciling item.