Commentary

D7.5119 Restriction of losses following additions to the long-term insurance fund—accounting periods ending on or after 22 April 2009

Corporate tax
Corporate tax | Commentary

D7.5119 Restriction of losses following additions to the long-term insurance fund—accounting periods ending on or after 22 April 2009

Corporate tax | Commentary

D7.5119 Restriction of losses following additions to the long-term insurance fund—accounting periods ending on or after 22 April 2009

The rules in this division apply for accounting periods beginning before 1 January 2013. For accounting periods beginning on or after 1 January 2013 see Division D7.4.

HMRC have been concerned for many years that life insurance companies can manipulate the amount and timing of the emergence of tax relievable losses on long-term insurance business despite industry protestations to the contrary.

One weapon in HMRC's armoury to counter what it perceived as abusive was to tax amounts added to the long-term fund by the company's shareholders and shown as a negative transfer from the technical account in the regulatory revenue account. HMRC acknowledged that it was perfectly proper for shareholders to introduce funds for valid commercial reasons so in practice this argument was seldom deployed and then only in very specific circumstances. Nevertheless the threat of its use meant that shareholders could never be certain that funds needed by the long-term business might only be received net of tax. HMRC's Life Assurance Manual previously

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