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HMRC internal manual

Corporate Intangibles Research and Development Manual

HM Revenue & Customs
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VRR: how relief is given: insurance companies

FA02/SCH13/PARA22 - 23

There are special rules for taxing insurance companies and so there are special rulesfor VRR for them. They apply where the company’s profits from life assurance businessare taxed under Case III, V or VI Schedule D rather than Case I. If the company is taxedCase I Schedule D the normal rules apply.

If a company carrying on life assurance business qualifies as an SME treat it as not beingan SME for VRR purposes.

If an insurance company’s profits from life assurance business are calculated on theI minus E basis they are not taxed under Case I Schedule D and you should treat VRR as amanagement expense.

If there is a category of life assurance business charged under Case VI Schedule D byICTA88/S436, ICTA88/S439B or ICTA88/S441, give VRR as a deduction in calculating theprofits of that category of business.

If the I minus E basis applies do not give a company VRR in any Case I computations thatit makes.

This provision mirrors that for the general R&D tax relief.