Commentary

D7.424 Insurance special purpose vehicles—securitisation vehicles

Corporate tax
Corporate tax | Commentary

D7.424 Insurance special purpose vehicles—securitisation vehicles

Corporate tax | Commentary

D7.424 Insurance special purpose vehicles—securitisation vehicles

The rules in this division apply for accounting periods beginning on or after 1 January 2013. For accounting periods beginning before 1 January 2013 see Division D7.5.

ISPVs used as securitisation vehicles are covered by the legislation dealing with the taxation of securitisation companies in the wider financial services sector1. Such ISPVs might be used for the securitisation of the value of a block of in-force business, the issuing of bonds based on longevity or mortality exposure or allowing third parties to invest in and share the profits from a particular block of business.

It is recognised however that the wider capital markets taxation regime, under which securitisation companies are taxed on the small turn they make over the life of the transaction rather than the profits shown in their accounts, does not fit well with the way that ISPVs used for securitisations were likely to measure their economic return. As a result a separate regime was introduced for such companies2. In broad terms an ISPV used for a capital markets transaction will be taxed on the basis of its accounts profits but those profits will be calculated using UK generally accepted accounting practice as it stood at 31 December 2006 but

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