Corporation Tax Act 2009 section 323B

Insurers in financial difficulties: write-down orders

Section 323B sets out the corporation tax treatment where a company's debtor relationship is modified by a court order writing down the liabilities of an insurer in financial difficulties.

• When a debtor relationship is modified by a write-down order, the company does not have to recognise a taxable credit for any resulting reduction in the carrying value of the liability.
• A write-down order is a court order under section 377A of the Financial Services and Markets Act 2000 that reduces an insurer's liabilities.
• If no credit was brought into account because of this relief, the company is equally prevented from claiming a tax debit if the carrying value of the liability later increases back towards its original level.
• The effect is symmetrical: both the initial write-down benefit and any subsequent reversal of that write-down are kept outside the corporation tax computation.