Commentary

V18.106 Directions as to amounts of premiums

Part V18 Insurance Premium Tax

V18.106 Directions as to amounts of premiums

V18.106 Directions as to amounts of premiums

There is an anti-avoidance provision to prevent a scheme which may undervalue a premium.

If a premium received under an insurance contract is less than it would be in open market conditions1 HMRC may direct that for the purposes of the tax it shall be taken to be the open market value2. A direction to this effect must be made in writing to the insurer within three years of the receipt of the premium3. The direction may also cover premiums which will be received under the insurance contract after the date of the direction4.

A

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