Commentary

D7.516 Insurance special purpose vehicles – reinsurers

Corporate tax
Corporate tax | Commentary

D7.516 Insurance special purpose vehicles – reinsurers

Corporate tax | Commentary

D7.516 Insurance special purpose vehicles – reinsurers

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.

The rules relating to ISPVs that are reinsurers take effect for periods of account beginning on or after 1 January 20081.

As a starting point the rules need to ensure that any surplus that has been sheltered from tax through the use of a book value election under IPRU(INS) Rule 9.10(c) does not escape tax under the new regime. This is achieved by bringing a trading receipt into the computation of the company's trading profits for the first period in which the company is an ISPV of an amount equal to the excess of the amount shown at line 51 of Form 14 of its FSA return for the preceding period over the value of the fund for future appropriations in its IAD accounts or the unallocated divisible surplus shown in its IAS accounts, whichever is applicable to the ISPV in question. For these purposes the term 'IAD accounts' refers to accounts prepared in accordance with the EU Insurance Accounts Directive (No. 91/674/EEC) and the term 'IAS accounts' means accounts prepared in accordance with International Accounting Standards2.

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