Commentary

D7.438 Loan relationships, derivative contracts and intangible fixed assets

Corporate tax
Corporate tax | Commentary

D7.438 Loan relationships, derivative contracts and intangible fixed assets

Corporate tax | Commentary

D7.438 Loan relationships, derivative contracts and intangible fixed assets

The general rules for the taxation of loan relationships in CTA 2009, Pt 5 (see Division D1.7), derivative contracts in CTA 2009, Pt 7 (see Division D1.8) and intangible assets in CTA 2009, Pt 8 (see Division D1.6) apply in calculating the BLAGAB I-E profit of life insurance companies with some modifications. Notwithstanding the fact that an insurance company is party to these arrangements as part of its insurance trade, any credits and debits referable to BLAGAB are brought into account as non-trading debits or credits1.

The company's acceptable commercial allocation method (see D7.432) will determine what part of any debit or credit arising from a loan relationship, derivative contract or intangible fixed asset of the company is referable to BLAGAB and therefore to be included in the measure of I-E profit2.

In measuring the income for inclusion in Step 1 of FA 2012, s 73:

  1.  

    (a)     BLAGAB credits arising on loan relationships and derivative contracts are included only insofar as they exceed BLAGAB debits3, and

  2.  

    (b)     BLAGAB credits brought into account on intangible fixed assets are included only

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