Sinclair Pharma

8. TAXATION ON LOSS OF ORDINARY ACTIVITIES

	2008	2007
	£'000	£'000
Current tax
UK Corporation tax underprovided for prior years	—	3
Research and development tax credits receivable	(140)	—
Overseas tax	81	4
Deferred tax
Deferred overseas tax	(351)	203
Deferred overseas tax under provided in prior year	—	16
Release of overseas tax provision – exceptional item	(1,354)	—
Tax (credit)/expense on operating profit/(loss)	(1,764)	226

On 8 July 2008, Sinclair Pharma France received judgement in its favour in the case against the French tax authorities relating to disputed tax charges levied on Groupe CS Dermatologie prior to its acquisition by Sinclair. The provision against this tax asset has therefore been released as an exceptional item, and interest receivable also recovered of £380,000 included in finance income.

Factors affecting the tax charge
The tax assessed on the loss on ordinary activities for the year is higher than the standard rate of corporation tax in the UK of 28% (2007: 30%). The differences are reconciled below:

	2008	2007
	£'000	£'000
Profit/(loss) on ordinary activities before tax	1,574	(3,980)
Operating profit/(loss) multiplied by the standard
rate of corporation tax in the UK of 28% (2007: 30%)	441	(1,194)
Expenses not deductible for tax purposes	329	277
Research and development tax credit	(140)	(10)
Utilised)/unrelieved UK tax losses	(578)	1,187
Unrelieved/(utilised) overseas tax losses	155	297
Tax rate difference	(3)	18
Decelerated capital allowances	(50)	(41)
Release of overseas tax provision	(1,354)	—
Temporary difference arising from share-based remuneration	—	51
Tax underprovided in prior years	—	3
Deferred tax underprovided	—	16
Other temporary differences	(564)	(378)
Total tax	(1,764)	226

Deferred tax: Group
The Group has a potential deferred taxation asset, which has not been recognised in the accounts, due to uncertainties surrounding suitable future taxable profits as follows:

	2008	2007
	£'000	£'000
Taxation losses	(2,098)	(3,914)
Accelerated capital allowances	(198)	(191)
Future tax relief for share-based remuneration	(507)	(1,767)
Other temporary differences	(618)	(630)
Unprovided deferred taxation asset	(4,231)	(6,502)

No deferred tax is recognised on the distributed profits of subsidiaries and joint ventures as they are reinvested by the Group and no tax is expected to be payable on them for the foreseeable future. Since acquisition, subsidiaries have earned profits of £1,024,000 (2007: £728,000) that have not been remitted to the Company.

Deferred tax: Company
£nil (2007: £nil) is provided for deferred taxation on the balance sheet.

Sinclair Pharma Text-only version

8. TAXATION ON LOSS OF ORDINARY ACTIVITIES