Yesterday, National Australia Bank decided to fess up and admit its 2013/14 full year profits will be taking hits from several big ticket items: provisions and payouts for its UK business, capitalised software, deferred tax assets and R & D tax policy changes.As was announced at NAB's third quarter trading update on 18 August 2014, the group was already feeling the pinch from both Payment Protection Insurance (PPI) and interest rate hedging product costs from its UK operations. Yesterday, it was a case of more of the same, with previous impairments charges increased: Provisions of £420 million (£336 million or A$605 million after tax) in relation to PPI for the September 2014 half year, which include £75 million announced in August 2014. This includes amounts required to cover the increased costs of administering the PPI remediation program. Provisions of £250 million (£200 million or A$359 million after tax) in relation to interest rate hedging products for the September 2014 half year, which include £170 million announced in August 2014. An annual impairment assessment of capitalised software has seen a charge of $297 million ($220 million after tax) taken against individually significant assets, predominantly in the Wealth and Australian Banking businesses, and other smaller assets in the UK and NZ region. Included in the software impairment charge is $106 million ($74 million after tax) for certain assets related to the NextGen project, other than the core banking platform asset where no impairment is required. Following a review of NAB's accounting policy for tax offsets, R&D offsets will now be recognised as a reduction to the related software expense or carrying value of software assets, "as this better reflects the true cost of software development", according to the bank. The impact of the change is a $68 million increase in tax expense, a $40 million decrease in operating expenses, a $40 million reduction in software assets and a $12 million decrease to the Deferred Tax Liability. The net impact to cash earnings after tax is a $28 million decrease. Following an assessment of regulatory changes and business model changes in the USA and their impact on the projections of future taxable income (and in turn the recoverability of "deferred tax assets" held in the New York branch), a provision of US$120 million (A$132 million) has been taken. The tax losses related to the DTA still remain available to the Group for up to 20 years.