2

There shall be taken into account as receipts of a period of account amounts (so far as referable to that business) brought into account for the period of account as—

a

investment income receivable before deduction of tax,

b

an increase in the value of non-linked assets,

c

an increase in the value of linked assets, or

d

other income;

and if amounts (so far as so referable) are brought into account for a period of account as a decrease in the value of non-linked assets or a decrease in the value of linked assets they shall be taken into account as an expense of the period of account.

2A

But subsection (2) above does not require to be taken into account as receipts of a period of account so much of the amounts brought into account as mentioned in paragraphs (a) to (d) of that subsection for the period of account as—

a

is entirely notional because an amount corresponding to it would fall to be brought into account as an expense (for that or any other period of account),

b

is exempted by section 444AC(2) of the Taxes Act 1988 (transfers of business), or

c

consists of interest paid under section 826 of the Taxes Act 1988 (interest on tax overpaid) in respect of a repayment or payment relating to an accounting period of the company ending before 1st July 1999;

but, subject to that, the whole of the amounts so brought into account for a period of account shall be taken into account as receipts of the period of account.

2B

If any assets of the company’s long-term insurance fund are transferred by the company so that they cease to be assets of that fund, but the transfer is not brought into account as part of total expenditure for the period of account in which the transfer takes place or any earlier period of account, the fair value of the assets at the time of the transfer shall be deemed to be brought into account for the period of account in which the transfer takes place as an increase in the value of the assets of that fund unless the assets are excluded from this subsection by—

a

subsection (2C) or (2D) below, or

b

section 444AD of the Taxes Act 1988 (transfers of business).

2C

Assets transferred to discharge liabilities in respect of deposits received from reinsurers or arising out of insurance operations, debenture loans or amounts borrowed from credit institutions are included in subsection (2B) above only if the deposits, loans or amounts borrowed—

a

were brought into account for any period of account, but

b

were not taken into account as receipts of the period of account under subsection (2) above.

2D

Assets are excluded from subsection (2B) above if they are transferred for at least their fair value and the consideration for their transfer, when received, forms part of the company’s long-term insurance fund.

2E

If subsection (2B) above applies in relation to the transfer of all the assets of the company’s long term insurance fund in accordance with—

a

an insurance business transfer scheme, or

b

a scheme which would be such a scheme but for section 105(1)(b) of the Financial Services and Markets Act 2000 (which requires the business transferred to be carried on in an EEA State),

the reference in that subsection to an amount being deemed to be brought into account for the period of account in which the transfer takes place is to its being so deemed for the period of account ending immediately before the transfer takes place.

“fair value”, in relation to assets, means the amount which would be obtained from an independent person purchasing them or, if the assets are money, its amount;