Corporation Tax Act 2010 section 269ZG

General insurance companies: excluded accounting periods

Section 269ZG provides an exemption from the corporation tax loss restriction rules for certain general insurance companies that are in insolvency and have been rendered non-viable mainly because of qualifying latent claims.

• General insurance companies in insolvency whose non-viability is mainly caused by qualifying latent claims can have their accounting periods treated as "excluded," allowing full loss relief without the usual restrictions.
• Two conditions must both be met: Condition A requires the company to be in insolvency, to have been unable to pay its debts immediately beforehand, and to have been rendered non-viable mainly by qualifying latent claims; Condition B requires continued non-viability at the period end, again mainly due to qualifying latent claims.
• A company meets the non-viability condition if there is no realistic prospect it will ever write any new insurance business; liabilities for these purposes include contingent and prospective liabilities.
• A general insurance company is one authorised under Part 4A of the Financial Services and Markets Act 2000 to effect or carry out general insurance contracts, but friendly societies and insurance special purpose vehicles are excluded from this definition.