Deferred tax

As a result of their different methods of accounting for tax in 2000, George Orwell would report higher profit after tax (and higher earnings per share) than Eric Blair, even though their actual tax bill was the same. Eric Blair’s £24m tax expense would exceed the £15m tax actually payable by £9m. This is the 30 per cent tax rate multiplied by the £30m excess of tax wdas (£75m) over book depreciation (£45m). This £9m difference would increase the ‘deferred tax provision’ account in the balance sheet (under long-term ‘provision for liabilities and charges’).