Corporation Tax Act 2009 section 394

Special rules for some debtor relationships

Section 394 provides special rules for allocating credits and debits from debtor relationships that are liabilities of a long-term insurance fund to the appropriate categories of a company's long-term business.

• Credits and debits arising from debtor relationships held as liabilities of a long-term insurance fund must be allocated to specific categories of the company's long-term business.
• The rules ensure that amounts are matched to the correct part of the insurer's business for corporation tax purposes.
• Special provisions address deposit back arrangements, where reinsurers of pension annuities deposit back all or a substantial part of the premium with the original insurer.
• Under deposit back arrangements, the original insurer may pay interest to the reinsurer on the deposited amount, and these transactions are subject to specific allocation rules.