Commentary

D7.483 General principles

Corporate tax
Corporate tax | Commentary

D7.483 General principles

Corporate tax | Commentary

Transfers of long-term business

D7.483 General principles

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.

Insurance companies are permitted to transfer all or part of their long-term business to another such company with the consent of the court under the corporate law and regulatory rules that govern their activities. The need for court consent stems from the fact that it is not legally permissible to transfer the rights under the individual policies en bloc without the consent of the individual policyholders which is clearly impractical for such transfers in all but the simplest circumstances. The current statutory authority is in the Financial Services and Markets Act 2000, Pt 7 (ss 104–117) and such transactions are therefore often referred to as 'Part 7 transfers'.

Transfers of business have become increasingly commonplace as the industry has gone through a period in which a number of demutualisations took place and acquisitions and consequent consolidation of business became the norm.

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