Corporation Tax Act 2009 section 565

Relevant amount where the relevant company uses fair value accounting

Section 565 sets out how to calculate the "relevant amount" used to determine the increased non-trading credit under section 563 when the company accounts for its investment life insurance contract using fair value accounting.

• Where fair value accounting is used, the relevant amount is calculated as: profit from the contract × (appropriate rate ÷ (100 minus the appropriate rate))
• The profit is generally the proceeds from the transaction minus the fair value of the contract at the "beginning time" — or, for a partial assignment or surrender, minus a proportionate fraction of that fair value
• The proportionate fraction is determined by dividing the amount payable from the transaction by the full fair value of the contract immediately before the transaction
• The "beginning time" is the start of the company's first accounting period beginning on or after 1 April 2008 if the contract was made before that date, or else the date the contract was originally made