Fair Tax Mark
Fair Tax Mark Statement of Friendly Soap Ltd (February 2020)
This statement of Fair Tax compliance was compiled in partnership with the Fair Tax Mark and certifies that Friendly Soap Ltd meets the standards and requirements of the Fair Tax Mark’s Small Business standard.
Tax Policy We are committed to paying all the taxes that we owe in accordance with the spirit of all tax laws that apply to our operations. We believe that paying our taxes in this way is the clearest indication we can give of our being responsible participants in society.
We will fulfil our commitment to paying the appropriate taxes that we owe by seeking to pay the right amount of tax (but no more), in the right place and at the right time.
We aim to do this by ensuring that we report our tax affairs in ways that reflect the economic reality of the transactions we undertake in the course of our trade.
We will not ever do is seek to use those options made available in tax law, or the allowances and reliefs that it provides in ways that are contrary to the spirit of the law. Nor will we undertake specific transactions with the sole or main aim of securing tax advantages that would otherwise not be available to us based on the reality of the trade that we undertake. As a result, the company will never undertake transactions that would require notification to HM Revenue & Customs under the Disclosure of Tax Avoidance Schemes Regulations or participate in any arrangement to which it might be reasonably anticipated that the UK’s General Anti-Abuse Rule might apply. We believe tax havens undermine the UK’s tax system. As a result, whilst we will trade with customers and suppliers genuinely located in places considered to be tax havens we will not make use of those places to secure a tax advantage, and nor will we take advantage of the secrecy that many such jurisdictions provide for transactions recorded within them.
Our accounts will be prepared in compliance with this policy and will seek to provide the information that users, including HM Revenue & Customs, might need to properly appraise our tax position.
The average profit before tax over the three years ended 31 May 2017, 2018 and 2019 was £148,431. The average current tax charge over the three years ended 31 May 2017, 2018 and 2019 was £22,031 (14.8%). The average expected current tax charge over the same period was £28,279 (19.05%).
The difference is due to depreciation in shortfall of capital allowances and a prior period adjustment. This is shown as follows:
1. Depreciation in excess/(shortfall) of capital allowances – The accounting treatment of capital assets differs from the tax treatment. For accounting purposes, an annual rate of depreciation is applied to capital assets and charged to the profit and loss account. For tax purposes, the depreciation charge is added back and instead a tax capital allowance is claimed a relief provided by law. Over time, however, these differences will equal one another.
2. Prior period adjustment – Adjustments to tax charges in earlier years arise because the tax charge in the financial statements is an estimate that is prepared before the detailed tax calculations are required to be submitted to HMRC, which is 12 months after the year-end. Also, HMRC may not agree with a tax return sometime after the year-end and liability for a prior period may arise as a result.
The company does not have any deferred tax assets or liabilities on its balance sheet and no deferred tax charge or credit was incurred during the periods.