Page 54 - Housing Solutions Annual Report

recognised and will be assessed for tax in a future period, except where the Group is able to control
the reversal of the timing difference and it is probable that the timing difference will not reverse in the
foreseeable future.

Deferred tax is calculated using the tax rates and laws that have been enacted or substantively enacted
by the reporting date that are expected to apply to the reversal of the timing difference.
Value Added Tax

The Group charges Value Added Tax (VAT) on some of its income and is able to recover part of the VAT it
incurs on expenditure. The financial statements include VAT to the extent that it is suffered by the Group
and not recoverable from HM Revenue and Customs. The balance of VAT payable or recoverable at the
year-end is included as a current liability or asset.
2.8 Financial instruments

All financial instruments meet the criteria of a basic financial instrument as defined in Section 11 of
FRS 102. The indexed linked loan is accounted for under the amortised cost model whereas the other
loans are at cost, as it is not expected that there will be any material difference between the cost and
amortised methods for these loans..
The Group and Association does have the appropriate rules to enable it to enter into third party hedging
arrangements. However, none are in place at this time.
2.9 Debtors
Short term debtors are measured at transaction price, less any impairment. Loans receivable are
measured initially at fair value, net of transaction costs, and are measured subsequently at amortised
cost using the effective interest method, less any impairment.
Where deferral of payment terms have been agreed at below market rate, and where material, the
balance is shown at the present value, discounted at a market rate.
2.10 Creditors
Short term trade creditors are measured at the transaction price. Other financial liabilities, including
bank, local authority and other loans, are measured initially at fair value, net of transaction costs, and are
measured subsequently at amortised cost using the effective interest method.
2.11 Employee Benefits

Short-term employee benefits and contributions to defined contribution plans are recognised as an
expense in the period in which they are incurred.
2.12 Pensions

The Group participates in a funded multi-employer defined benefit scheme - Royal County of Berkshire
Pension Scheme (RCBPS) and a defined contribution scheme operated by Scottish Widows.
The RCBPS scheme assets are measured at fair value. Scheme liabilities are measured on an actuarial
basis using the projected unit credit method and are discounted at appropriate high-quality corporate
bond rates. The net surplus or deficit is presented as a separate provision on the statement of financial
position. A net surplus is recognised only to the extent that it is recoverable by the Group through
reduced contributions or through refunds from the plan.
The current service cost and costs from settlements and curtailments are charged against operating
surplus. Past service costs are recognised in the current reporting period. Net interest costs are
calculated by applying the discount rate to the net defined benefit liability and are recognised in
the income and expenditure account as a finance cost. Remeasurements are reported in other
comprehensive income.

The Scottish Widows scheme is accounted for as a defined contribution plan. The charge to income and
expenditure represents the employer contribution payable to the scheme for the accounting period.

54 Annual Report and Accounts 2020

10/11/2020 13:35
16645.02 HS Annual Report 86pp A4 v10.indd 54
16645.02 HS Annual Report 86pp A4 v10.indd 54 10/11/2020 13:35