TaxationTaxation for the year comprises current and deferred tax. Tax is recognised in the Statement of Incomeand Retained Earnings, except to the extent that it relates to items recognised in other comprehensiveincome or directly in equity.Current or deferred taxation assets and liabilities are not discounted.Current tax is recognised at the amount of tax payable using the tax rates and laws that have beenenacted or substantively enacted by the balance sheet date.Deferred taxDeferred tax is recognised in respect of all timing differences that have originated but not reversed at thebalance sheet date.Timing differences arise from the inclusion of income and expenses in tax assessments in periodsdifferent from those in which they are recognised in financial statements. Deferred tax is measured usingtax rates and laws that have been enacted or substantively enacted by the year end and that are expectedto apply to the reversal of the timing difference.Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probablethat they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.Hire purchase and leasing commitmentsRentals paid under operating leases are charged to profit or loss on a straight line basis over the period ofthe lease.Pension costs and other post-retirement benefitsThe company operates a defined contribution pension scheme. Contributions payable to the company'spension scheme are charged to profit or loss in the period to which they relate.Research and developmentIn the research phase of an internal project it is not possible to demonstrate that the project will generatefuture economic benefits and hence all expenditure on research shall be recognised as an expense whenit is incurred. Intangible assets are recognised from the development phase of a project if and only ifcertain specific criteria are met in order to demonstrate the asset will generate probable future economicbenefits and that its cost can be readily measured. The capitalised development costs are subsequentlyamortised on a straight line basis over their useful economic lives which range from 3 to 5 years.It is not possible to distinguish between the research phase and the development phase of an internalproject. The expenditure is treated as if it were incurred in the research phase only.