b'Mercia Asset Management PLC113Annual Report and Accounts 2021TaxationThe tax expense represents the sum of the tax currently payable and deferred tax. Current and deferred tax are recognised in the income statement, except when they relate to items that are recognised in other comprehensive income or directly in reserves, in which case the current and deferred tax are also recognised in other comprehensive income or directly in reserves respectively. Where current or deferred tax arises from the initial accounting of a business combination, the tax effect is included in the accounting for the business combination.The tax currently payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible. The Companys liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary timing differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available, against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Strategic report GovernanceDeferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.35. Critical accounting judgements and key sources of estimation uncertainty Financial statementsDetails of critical accounting judgements, estimates and associated assumptions are disclosed in note 1 to the consolidated financial statements.36. Summary of disclosure exemptions adoptedThe following exemptions from the requirements of IFRS have been applied in the preparation of these financial statements, in accordance with FRS 101:paragraphs 45(b) and 46 to 52 of IFRS 2, Share-based payments (details of the number and weighted-average exercise prices of share options, and how the fair value of goods or services received was determined); IFRS 7, Financial Instruments: Disclosures; IAS 7, Statement of Cash Flows; paragraphs 28 to 30 of IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors specifically in respect of the disclosure of new standards in issue but not yet effective; the requirement in IAS 24, Related Party Disclosures to disclose related party transactions entered into between two or more members of a group; and the following paragraphs of IAS 1, Presentation of Financial Statements:10(d) (statement of cash flows),16 (statement of compliance with all IFRS),111 (cash flow statement information), and134-136 (capital management disclosures). 37. Results for the CompanyThe Directors have taken advantage of the exemption available under Section 408 of the Companies Act 2006 and have not presented a statement of comprehensive income or a cash flow statement for the Company.The auditors remuneration for audit and other services is disclosed in note 7 to the consolidated financial statements.'