Income Tax (Trading and Other Income) Act 2005 section 544

Application of Chapter to policies and contracts in which companies interested

Section 544 deals with how the chargeable event rules apply to a life insurance policy or capital redemption contract where, at some point in its history, a company (rather than an individual) may have had an interest in it, meaning corporation tax rules rather than income tax rules would have applied at that time.

• When determining whether a chargeable event has occurred and the amount of any gain, it may be necessary to look at what happened to the policy or contract at an earlier (or later) time
• The fact that a gain at that other time would have fallen (or would fall) within the corporation tax regime rather than the income tax regime does not affect how this Chapter applies
• The relevant corporation tax provisions include Chapter 2 of Part 13 of ICTA (the corporation tax equivalent of the chargeable event rules), paragraph 20 of Schedule 15 to ICTA (replacement of qualifying policies), and section 79 of FA 1997 (payments under certain life insurance policies)
• In practice, this ensures continuity of treatment when a policy passes between individual and corporate ownership, so that no gaps or double charges arise simply because a different tax code applied at a different point in the policy's life