Commentary

D7.526 Other income, gains and losses – accounting periods beginning on or after 1 January 2007

Corporate tax
Corporate tax | Commentary

D7.526 Other income, gains and losses – accounting periods beginning on or after 1 January 2007

Corporate tax | Commentary

D7.526 Other income, gains and losses – accounting periods beginning on or after 1 January 2007

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.

Having dealt with the income, gains and losses on assets backing linked business and foreign business assets, the legislation provides a formulaic approach to calculating the 'relevant fraction' of the income, gains and losses not directly referable to any category of business that are to be referable to the different categories1.

The legislation apportions the company's income, gains and losses that are not directly referable to any category of business only to BLAGAB, gross roll up business or PHI business as the case may be. The various calculations are expressed in arithmetical terms which makes for easier understanding of the legislation in a way that is consistent with the principles of the Tax Law Rewrite project. Finally the revised legislation also provides rules for situations in which the calculation of the apportionment fractions gives rise to negative denominators. This was always a theoretical possibility but following changes to the reserving rules introduced by the FSA in 2006 it is possible to have negative liabilities (ie assets) on some classes of business so the situation may become more commonplace.

The calculation of the relevant

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