The General Insurance Reserves (Tax) Regulations 2001

Explanatory Note

(This note is not part of the Regulations)

These Regulations supplement section 107 of the Finance Act 2000 (c. 17), which provides that where it becomes apparent in a period of account that technical provisions made by a general insurer for an earlier period were excessive, or insufficient, an amount is to be treated as added (as an “end of period adjustment”) as a receipt or expense, respectively, of the general insurer’s trade in the later period, for tax purposes. The principal effects of these Regulations are (1) to provide the method of calculating whether the technical provisions were excessive or insufficient (2) to provide for the currencies in which the calculations, including the discount rate, are to be carried out, and (3) to provide for modifications of those rules where they apply to underwriting members.

Regulation 1 provides for citation, commencement and effect, and regulation 2 for definitions.

Regulation 3 provides for the method of calculation of the additional receipt or expense.

Regulation 4 provides for transfers of a general insurer’s business, and arrangements between connected persons.

Regulation 5 provides for elections for the currency in which the calculations are to be made, and related discount rates.

Regulation 6 excludes certain companies undergoing insolvency procedures from the definition of “general insurer”.

Regulation 7 provides for the modifications to the rules of underwriting members.

Regulation 8 provides for the timing of elections under section 107(4) of the Finance Act 2000, and Schedule 24 to the Income and Corporation Taxes Act 1988 (c. 1).

Regulation 9 provides an apportionment rule for calculations under the Regulations.

Authority for the retrospective effect of these Regulations is conferred by section 107(12) of the Finance Act 2000.