Corporation Tax Act 2009

394 Special rules for some debtor relationships

(1) This section sets out the rules referred to in section 393(3) as to how far certain credits or debits given for the purposes of this Part in respect of liabilities representing a debtor relationship of an insurance company which are liabilities of its long-term insurance fund are referable to any particular category of its long-term business.

(2) If the liabilities are liabilities of an internal linked fund of the company relating to one category of long-term business, the credits or debits are referable to that category.

(3) If the liabilities are liabilities of an internal linked fund of the company relating to two or more such categories, the credits or debits are referable to those categories in the same proportions as the linked assets in the fund are apportioned to them under section 432ZA(4) of ICTA (linked assets).

(4) If—

(a) the liabilities arise from deposit back arrangements, and

(b) the business reinsured by the arrangements under which the deposit back arrangements are made (“the reinsurance arrangements”) is within one category of long term business,

the credits or debits are referable to that category.

(5) If—

(a) the liabilities arise from deposit back arrangements, and

(b) the business reinsured by the reinsurance arrangements is within two or more such categories,

the credits or debits are referable to those categories in the same proportions as the relevant proportions of the liabilities reinsured by the arrangements which are liabilities relating to those categories.

(6) For the purposes of subsection (5) “relevant proportion”, in relation to reinsured liabilities of any particular category of business, means the average of—

(a) the proportion of all the reinsured liabilities that are liabilities relating to that category at the beginning of the period of account, and

(b) the proportion of all the reinsured liabilities that are liabilities relating to that category at the end of that period.

(7) Debits relating to interest payable in respect of the late payment of any benefits are referable to the category of long-term business that comprises the effecting and carrying out of the policies or contracts under which the benefits are payable.